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After the initial volatile phase on Tuesday, the Nifty settled into moving higher with minor dips getting bought into. The index yet again defended its September swing low of 24,750 and reversed from those levels. The fact that the Nifty closed one, above 25,000 and two, near the highest point of the day will give the bulls some confidence.
But now comes the big question. Has the Nifty made its bottom for the time being? Will 24,694 now become the new swing low for the Nifty? Or will traders use this bounce to exit from existing longs and resume the downside on the index?
Jai Bala of cashthechaos.com believes that the Nifty has a very high probability of testing its Lok Sabha election day low, which is still around 4,000 points from Tuesday’s closing levels.
“I pointed out last week that Reliance Industries’ underperformance is a case for the Nifty to drop and correct somewhere close to the June 4 low. And that is now the probability for the market. The market has a very good probability that it’s heading towards the June 4 low of about 21,800 (21,281),” he said.
Wednesday will be another important session for the markets as the Reserve Bank of India will announce its Monetary Policy decision and the consensus going around is that while policy will be a “status quo” for the tenth time in a row, there might just be a change in policy stance to “neutral” from “withdrawal of accommodation.”
Commentary from the RBI Governor on the road ahead may be a key factor in determining market sentiment in mid-week trading before TCS kickstarts the earnings season on Thursday.
Foreign institutions continued to remain net sellers in the cash market on Tuesday, albeit the pace of selling was slower, while domestic institutions outbought their foreign counterparts for yet another session.
Osho Krishnan of Angel One observed the formation of a bullish Harami formation on Nifty’s daily charts and follow-up buying on Wednesday might confirm the same. 24,800 on the downside is a significant support and a break below that might drag the index down to 24,500 levels. On the flip side, a string of resistance zones lie between 25,100 – 25,300.
The previous higher tops and higher bottom pattern on the Nifty was negated when it slipped below the September 9 low of 24,753 and hence the present upside bounce could be short-lived, fears Nagaraj Shetti of HDFC Securities. Only a decisive move above 25,000 can take the index to 25,400 – 25,500 in the near-term. Immediate support is at 24,700.
Sanctum Wealth’s Aditya Agarwal expects this short covering move on the Nifty to extend to levels of 25,200 – 25,350 levels with downside support at 24,850, followed by 24,750 levels.
A 500-point upmove on the Nifty Bank also comforted the bulls on Tuesday, with the index closing above the mark of 51,000 as well. The Nifty Bank will be in focus on Wednesday not just because of the monetary policy decisions but also due to its weekly options expiry. HDFC Bank, the biggest laggard on the index in this sell-off, led the rebound as well on Tuesday.
Hrishikesh Yedve of Asit C Mehta Investment Interrmediates said that the Nifty Bank has formed an insider bar candle near the previous demand zone, indicating strength. He advises a “buy-on-dips” strategy for the Nifty Bank as long as it manages to sustain above the 50,190 level. 51,800 on the upside will be a short-term hurdle.
The Nifty Bank has formed a bullish Harami pattern, which signifies that the prevailing bullish trend may take a temporary pause, said Om Mehra of SAMCO Securities. A complete reversal is yet to be confirmed and that will only happen on a decisive close above the mark of 52,000. He expects the Nifty Bank to move unevenly or remain indecisive with short-term resistance at 51,500 and 51,800, with support at 50,400.
What Are The F&O Cues Indicating?
Fresh long positions were seen in these stocks on Tuesday, meaning an increase in both price and Open Interest:
| Stock | Price Change | OI Change |
| Max Financial Services | 0.41% | 16.89% |
| Balkrishna Industries | 5.36% | 12.43% |
| IPCA Labs | 4.06% | 12.32% |
| Coromandel Internatioal | 0.25% | 10.67% |
| Dixon Technologies | 7.80% | 10.42% |
Fresh short positions were seen in these stocks on Tuesday, meaning a decline in price but an increase in Open Interest:
| Stock | Price Change | OI Change |
| Godrej Consumer Products | -1.97% | 16.43% |
| ICICI Lombard | -0.10% | 15.91% |
| SAIL | -0.89% | 12.21% |
| NMDC | -4.19% | 9.44% |
| SBI Life | -3.09% | 7.70% |
Short covering was seen in these stocks on Tuesday, meaning an increase in price but a decline in Open Interest:
| Stock | Price Change | OI Change |
| REC | 4.82% | -5.09% |
| HAL | 4.92% | -2.89% |
| Adani Ports | 4.59% | -2.31% |
| BHEL | 3.89% | -2.21% |
| ABB India | 5.07% | -1.90% |
These are the stocks to watch out for ahead of Wednesday’s trading session:
- Dr. Reddy’s Laboratories: Arm Aurigene Oncology announces Phase 1 results for Ribrecabtagene Autoleucel from SWASTH study. DGCI has given its nod to commence phase 2 of the trial. SWASTH Study is India’s first trial for a Novel Autologous BCMA directed CAR-T Cell Therapy in patients with Relapsed / Refractory Multiple Myeloma.
- IRFC: To finance up to ₹700 crore under finance lease for 20 BOBR rakes procured under the General-Purpose Wagon Investment Scheme of the Ministry of Railways.
- Ola Electric: Sources told CNBC-TV18 that the Ministry of Road Transport and Highways may seek an explaination from Ola Electric regarding consumer complaints. Under Motor vehicle rules, companies can announce a voluntary recall.
- Bharti Airtel: Evaluate various opportunities for acquisitions from time to time. No material event yet that requires disclosure. The company responded to a report that it was in talks with the Tata Group to buy Tata Play.
- Torrent Power: Gets two Letter of Award from MSEDCL for supply of 2,000 MW Energy Storage Capacity. Annual Revenue from MSEDCL orders is at ₹1,680 crore.
- IRB Infra: September toll collections up 19.2% year-on-year to ₹501.8 crore from ₹421 crore.
- JSW Infra: Arun Maheshwari steps down as MD & CEO from November 7, 2024.
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