A morning walk down Dalal Street | Nifty can fall towards 200-day EMA if it breaks 11,470

Manic Monday! Indian markets witnessed a decline for the second session in a row

Taxation jitters hit D-Street as higher taxation proposed for the foreign portfolio investors (FPIs) in the Budget 2019 dented sentiments. Additionally, the absence of any fiscal stimulus as well as 20 percent tax on buyback of shares done by companies resulted in a knee-jerk reaction on D-Street.

Finance Minister Nirmala Sitharaman said on Monday there was no need for any clarification on the additional tax burden that could apply to foreign portfolio investors due to higher surcharges introduced by her budget last week.

News of Rs 38 bn fraud at PNB, brought back memories of the Nirav Modi scam and raised fresh worries of more such skeletons in the closet, suggest experts. A production cut by India top automobile manufacturer, Maruti Suzuki raised fresh worries of a slowdown.

In terms of sectors, the S&P Public Sector lost nearly 4 percent, followed by the S&P Capital Goods index that was down 3.7 percent, and the S&P BSE Realty index that fell 3.5 percent. The Nifty Bank was down 871 points or 2.77 percent.

On the broader market front, the S&P BSE Midcap index fell 2 percent while the S&P BSE Smallcap index was down 2.46 percent.

The rupee July 8 declined by 24 paise to close at 68.66 against the US dollar, cutting short its three winning run due to a massive selloff in equities and weakening expectations of a rate cut by the US Federal Reserve in near future.

On the institutional front, FPIs were net sellers in Indian markets for Rs 401 cr, while DIIs were net buyers for Rs 321 crore, provisional data showed.

Big News:

The S&P BSE Sensex wiped out more than 1500 points wiping out over Rs 8 lakh crore of investors’ wealth in the BSE listed companies in 25 sessions.

The S&P BSE Sensex which climbed Mount 40K on 3rd June fell 1547 points or about 4 percent to 38,720 on 8th July 2019. The Nifty50 fell over 4 percent in the same period.

Over 160 stocks fell 10-50 percent since June 3rd in the S&P BSE500 index which includes names like BPCL, Suzlon Energy, HPCL, Gujarat Gas, Rain Industries, Equitas Holdings, Biocon, Quess Corp, PC Jeweller, Reliance Infra, Reliance Capital, and Jet Airways, etc. among others.

Technical View:

Nifty formed a bearish candle on the daily charts| slips below 50-days EMA

The index took support at 100-EMA but closed below 11600 levels

After breaking crucial supports, experts turned more cautious and said it could fall towards 200-day exponential moving average (11,270) if it breaks 11,470.

India VIX moved up 7.33 percent to 14.01. Volatility is moving higher after the decline of five trading sessions.

The index also recorded a sell signal based on Supertrend indicator. The last time when Supertrend gave a sell signal was back in the month of May when the index touched a low of around 11,110.

Three levels: 11450, 11771, 11800

Max Call OI: 12000, 12500

Max Put OI: 11300, 11500

Stocks in news:

Country's largest IT services provider, Tata Consultancy Services (TCS) is expected to deliver steady growth in revenue but there could be pressure on the margin that may impact profitability in the first quarter of FY20. The constant currency revenue growth could be more than 3 percent with around 20-50 basis points cross currency headwinds, driven by strong order book and retail segment.

Shareholders of Fortis Healthcare on July 08 approved a resolution allowing the hospital chain to sell its stake in the Medical and Surgical Centre (MSCL).

India’s government aims to raise up to 150 billion rupees ($2.18 billion) by reducing its stake in 18 state firms to 75%, a finance ministry official involved in the matter said on Monday, as it looks to boost revenues and rein in the fiscal deficit.

Technical Recommendations:

We spoke to Religare Broking Ltd and here’s what they have to recommend:

Indiabulls Housing Finance: Sell July Futures| Target: Rs 640| Stop-Loss: Rs 730| Downside 8.6%

IndusInd Bank: Sell July Futures| Target: Rs 1425| Stop-Loss: Rs 1525| Downside 4%

Lupin: Sell July Futures| Target: Rs 700| Stop-Loss: Rs 760| Downside 6%