March 13th 2024 Stock Market analysis

‍Market Meltdown: Sensex and Nifty Plummet Up to 1.5% in Broad Sell-off, Signaling Potential Intensification of Correction‍

The Nifty 50 and the Sensex experienced significant declines of over 1% each on Wednesday, March 13, reacting to US inflation data showing a slight increase in February, fueling concerns of potential delay in rate cuts by the US Federal Reserve beyond June. The Nifty 50 opened at 22,432.20, dropping 1.9% to reach an intraday low of 21,905.65, ultimately closing at 21,997.70 with a loss of 1.51%. Among the Nifty 50 constituents, 43 stocks ended in the red, with Power Grid, Coal India, and Adani Enterprises emerging as the top losers with declines of 7.07%, 7%, and 6.81%, respectively. 

The Sensex opened at 73,993.40, falling 1.6% to hit an intraday low of 72,515.71, eventually closing at 72,761.89, down 1.23%. Mid and smallcap indices witnessed significant losses, with the BSE Midcap index dropping nearly 5% and the BSE Smallcap index plunging over 5% during intraday trade. The BSE Midcap index concluded with a loss of 4.20%, while the BSE Smallcap index ended down 5.11%. The collective market capitalization of BSE-listed firms declined from nearly ₹385.6 lakh crore to approximately ₹372.1 lakh crore in a single session, resulting in investors losing about ₹13.5 lakh crore.

Technical Outlook on 14th March

Nifty is anticipated to find immediate support levels near 21,862 followed by 21,727, with resistances expected at 22,132 and 22,267. Currently, Nifty is poised for range-bound trading.

Similarly, Bank Nifty is likely to encounter immediate support near 46,668 and 46,355, while resistances are expected at 47,294 and 47,607. Bank Nifty also appears set for range-bound trading.

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Derivative Outlook on 14th March

PCR Analysis: Nifty PCR-OI has decreased with nifty has negative which shows CALL WRITING.

Open Interest Analysis: Nifty future March contract OI has increased with negative close which shows Short Buildup.

Cost of Carry Analysis: Nifty MARCH month contract has ended in low compare with APR contract and low range compare with previous session which indicates a slight negative bias.

India VIX Analysis: India VIX has closed at 14.43 vs 13.64 (DoD) basis which shows increase in volatility.

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ITC's market capitalisation catching up with British American Tobacco (BAT)

The surge in ITC share price, spurred by reports of a block deal with British American Tobacco Plc (BAT) as the likely seller of ITC shares, saw an 8.59% increase to ₹439.00 apiece on the BSE in early Wednesday trading. Approximately 43.7 crore ITC shares, representing 3.5% of the total equity of the company, were traded in the pre-market block window. The shares were sold at an average price of ₹400.4 each, totaling ₹17,491 crore in transaction value, as per reports.

Earlier announcements indicated that BAT intended to divest a 3.5% stake in ITC through block deals, with a price range set between ₹384 and ₹400.25 per share, implying a discount of 4-5% from ITC’s Tuesday closing price. Following the sale, BAT's shareholding in ITC will reduce to 25.5%, as outlined in a term sheet with a lock-in period of 180 days.

Tadeu Marroco, BAT's CEO, stated that the transaction would facilitate a sustainable buyback initiative and contribute to debt reduction targets. He emphasized BAT's commitment to maintaining a significant stake in ITC amid its growth journey.

Despite ITC's recent decline of nearly 20% from its peak and over 13% year-to-date, analysts perceive this as an opportune moment to invest due to attractive valuations. Manish Chowdhury, Head of Research at StoxBox, noted a temporary peak in ITC shares around ₹500 before the announcement of the hotel business demerger in August 2023 but remains optimistic about the company's long-term prospects, citing its robust brand presence and potential growth in the FMCG sector.