Stock market recap: Benchmark equity indices had a subdued session on Monday, 7 September, as escalating tensions in West Asia pushed crude oil prices higher and stronger-than-expected US jobs growth increased bets on a Federal Reserve rate hike next week, prompting investors to shun riskier assets.
The Nifty 50 fell 0.57% to 23,779, extending its losing streak to four sessions, while the Sensex declined 0.5% to 76,132. Both indices touched their lowest levels since 24 July during the session.
Broader markets were mixed, with the Nifty Midcap 100 rising 0.46% and the Nifty Smallcap 100 ending flat.
Technology stocks led the decline after the stronger US jobs data boosted expectations of a September rate hike. Higher US rates could constrain client spending, hurting Indian IT firms that derive a significant share of revenue from the US.
Brent crude touched a six-week high, nearing $97 a barrel, as the US and Tehran reportedly carried out their biggest exchange of tanker attacks yet. Inflation concerns pushed bond yields higher across Europe and Asia.
Two stock recommendations by MarketSmith India:
Buy: Paras Defence and Space Technologies Ltd (current price: ₹1,489)
- Why it’s recommended: Government push pushes for defence indigenization, strong tailwinds from India’s Aatmanirbhar Bharat initiatives and import restrictions, key domestic supplier for specialized defence and space components, dominance in niche high-growth technologies, including high-end optics, submarine periscopes, drone cameras, electromagnetic protection and anti-drone solutions, and positioning the company ahead of broader market competitors.
- Key metrics: P/E: 121.70, 52-week high: ₹1,585.00, volume: ₹262.80 crore
- Technical analysis: Consolidation- based breakout
- Risk factors: Elongated working capital cycle, high inventory holding periods, lengthy payment collection timelines, short-term liquidity and operational cash-flow pressures, client concentration and order-execution volatility, significant reliance on a small number of key government and defence clients, and vulnerability to order delays or policy shifts.
- Buy: ₹1,474–1,496
- Target price: ₹1,750 in two to three months
- Stop loss: ₹1,390
Buy: Apollo Micro Systems Ltd (current price: ₹404)
- Why it’s recommended: Strong defence order book visibility, multi-year order pipeline driven by DRDO contracts, critical electronic subsystems for missile programmes such as QRSAM and Akash-NG, anti-drone solutions, CapEx expansion into end-to-end systems, and transition from component manufacturing to high-margin complete weapon systems through major greenfield plant expansions.
- Key metrics: P/E: 125.76, 52-week high: ₹466.50, volume: ₹470.82 crore
- Technical analysis: Tight range breakout
- Risk factors: Weak cash flow, high working-capital intensity, persistent difficulty converting reported profits into operating cash flow due to funds being tied up in inventory and long debtor days, dilution and debt dependency, and high reliance on frequent equity issuances, warrant execution, and external debt to fund working capital and aggressive capital expenditures.
- Buy at: ₹400–406
- Target price: ₹470 in two to three months
- Stop loss: ₹383
How Nifty 50 performed
Indian equities ended Monday’s session under pressure, with the Nifty 50 closing at 23,779.15, down 118.55 points, or 0.50%. The index traded between 23,737.90 and 23,890.00, indicating persistent selling through much of the session. The Sensex also closed lower, as escalating US-Iran tensions, higher crude oil prices and renewed expectations of a US Federal Reserve rate hike weighed on risk appetite.
Sector-wise, IT (-2.28%) and Media (-2.86%) were the biggest drags, with Infosys, HCLTech and other technology stocks facing pressure. Pharma (+0.75%) and Healthcare (+0.68%) provided some support. Market breadth remained weak, with 1,509 stocks advancing against 2,084 decliners and 105 unchanged, translating into an advance-decline ratio of roughly 0.72 and highlighting broad-based selling beyond the benchmarks.
From a technical perspective, the Nifty remains under near-term pressure, extending its recent sequence of lower highs and lower lows. The index has slipped below the rising trendline that had guided its recovery from the April lows and breached its 100-day moving average, indicating a deterioration in the short-term technical structure. It is also trading below other key moving averages shown on the chart, reinforcing the negative bias.
Momentum indicators corroborate the weakness. The RSI has fallen to 34.72, below its signal average of 43.78, reflecting strengthening bearish momentum, although it is approaching oversold territory. The MACD remains below its signal line and in negative territory, while its negative histogram points to continued downside momentum, with no meaningful bullish reversal signal yet.
On the downside, a decisive break below the 23,800–23,750 zone could reinforce bearish momentum and extend the corrective move towards 23,650–23,500. On the upside, the 100-day moving average and 24,000 mark are likely to act as initial resistance. A sustained close above 24,000 would improve the short-term outlook and could open the way for a broader recovery towards 24,400.
How did the Nifty Bank perform?
Nifty Bank opened on a negative note at 57,343.30 and briefly touched an intraday high of 57,426.85, where profit booking intensified. The index subsequently fell to 57,002.95 before closing near the session’s lower end at 57,088.30, down 281.35 points, or 0.49%. The session formed a bearish candle with a modest lower shadow, reflecting sustained selling pressure despite some buying around 57,000.
The index slipped below its 21-SMA at 57,508.50, 50-SMA at 57,571.44 and 200-SMA at 57,422.20, weakening its near-term structure. It remains above the rising 100-SMA at 56,537.69. The breakdown from the recent narrow consolidation suggests that bears are gaining control, although confirmation would require sustained trading below 57,000.
The RSI declined to 44.56 and remained below its signal average of 49.84, indicating weakening momentum and a shift towards bearish territory. It remains above the oversold zone, leaving room for further downside before a technical rebound becomes compelling. The MACD line also remained below its signal line, while the negative histogram expanded, confirming bearish momentum. No meaningful bullish divergence is visible on the daily chart.
With the index trading below its short-term averages and the 200-SMA, momentum favours sellers. However, the rising 100-SMA could provide an important medium-term demand zone.
Immediate support is placed at 57,000, followed by 56,750 and the 100-SMA near 56,538. A decisive close below this cluster could extend the decline towards 56,000. On the upside, the 200-SMA near 57,422 is the first resistance, while the 21- and 50-SMAs form a stronger supply zone at 57,500–57,575. Beyond this, 57,800–58,000 remains the major breakout area.
The near-term outlook remains cautious as elevated crude oil prices, renewed geopolitical tensions, stronger U.S. rate-hike expectations and persistent FII selling could restrain risk appetite. Unless Nifty Bank decisively reclaims 57,575, rebounds may attract selling. However, holding 56,538 could preserve the broader range-bound structure.
MarketSmith India is a stock research platform and advisory service focused on the Indian stock market. It offers tools and resources to help investors make informed decisions based on the CAN SLIM methodology, founded by legendary investor William J. O'Neil. You can access a 10-day free trial by registering on its website.
Trade name: William O’Neil India Pvt. Ltd.
Sebi Registration No.: INH000015543
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.