May 7, 2024
3 min
The decline in India's benchmark indices Sensex and Nifty 50 on May 7 was driven by widespread selling, dampening market confidence near record highs. Sensex closed 383 points (0.5%) lower at 73,511.85, while the Nifty 50 fell 141 points (0.6%) to 22,301.50. Among the total stocks, 840 advanced, 2,441 declined, and 82 remained unchanged.
This downturn was exacerbated by disappointing Q4 earnings, with Kotak Securities highlighting limited positive surprises, resulting in minimal earnings upgrades. While Nifty FMCG Index rose by 2% and Nifty IT by 0.77%, Nifty realty and metals witnessed declines of 3.5% and 2.4% respectively. Other sectors such as Nifty PSU Bank Index (down 2.3%), Nifty Healthcare (down 2%), and Nifty Auto (down 1.8%) also registered losses.
Nifty is likely to find immediate support around 22,170 followed by 22,038, while resistances are anticipated at 22,435 and 22,567. Currently, Nifty is showing a negative bias with significant swing trading activity expected.
For Bank Nifty, immediate support levels are seen near 47,881 and 47,477, with resistances projected at 48,689 and 49,093. The current sentiment for Bank Nifty is also leaning towards a negative bias, with the potential for high swing trading in the near term.
PCR Analysis: Nifty PCR-OI has decreased with nifty has negative which shows CALL WRITING.
Open Interest Analysis: Nifty future MAY contract OI has decreased with negative close which shows Long Unwinding.
Cost of Carry Analysis: Nifty MAY month contract has ended in low compare with JUNE contract and low range compare with previous session which indicates a profit booking remains in market.
India VIX Analysis: India VIX has closed at 17.01 vs 16.60 (DoD) basis which shows increase in volatility.
Paytm shares have witnessed persistent selling pressure, marking their ninth consecutive session of decline. The fintech company's stock remained locked at the 5 percent lower circuit, with a trading volume of 56 lakh shares on both BSE and NSE combined, significantly higher than the 1-month average of 17 lakh shares.
The recent downturn follows the resignation of Paytm's chief operating officer and president, Bhavesh Gupta, announced on May 5. However, the stock has been under strain since January 31, when the Reserve Bank of India (RBI) instructed Paytm Payments Bank (PBBL) to suspend key banking services. This was further compounded by the departure of Paytm Payments Bank MD and CEO Surinder Chawla. Over the past six months, Paytm shares have plummeted by 62%, leading to a decline in market capitalization to Rs 21,223 crore, equivalent to $2.5 billion.
Despite these challenges, mutual funds (MFs) and foreign portfolio investors (FPIs) have increased their stakes in the company in the previous quarter. Domestic funds raised their stake in Paytm by 1.17 percent to 6.15 percent in the March quarter, while FPIs owned 20.64 percent stake in the company, up from 18.64 percent in the December quarter.
The decline in Paytm's share price precedes the scheduled announcement of its March quarter results for fiscal year 2024. These results are expected to reflect the impact of regulatory restrictions imposed by the RBI on PPBL.
In Q3FY24, Paytm demonstrated robust revenue growth, primarily driven by its loan distribution platform, a high-margin business segment. However, following the RBI ban on PPBL, lending activities have been paused for over a month, likely impacting the company's revenue and profit more than anticipated during investor discussions.
Disclaimer: The investment insights provided by experts on Moneycontrol.com represent their personal views and not necessarily those of the website or its management. Readers are advised to consult certified experts before making any investment decisions.
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