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The index only traded in a 110 point range on Tuesday. The broader markets were no different. Although there was plenty of stock specific activity within the broader markets, particularly among those names which will be excluded from the Futures & Options space from February 28, which will mark the start of the March F&O series.
Thursday’s session will mark the end of yet another forgettable series for the Nifty bulls as this will be the fifth month in a row of negative returns during a series. The last instance of five straight months of negative returns for the Nifty happened 28 years ago, in 1996.
The recent fall also means that the Nifty is only 650-700 points away from giving up all the gains it made since the closing of June 4, 2024 of 21,887, which is the day when the Lok Sabha election results were declared.
Another sector that needs to be kept an eye on in Thursday’s session is the cables & wires names like Polycab, Havells, RR Kabel among others. This is after UltraTech, India’s largest cement company, announced a foray into this space with an ₹1,800 crore bet. It remains to be seen whether this move acts as a Birla Opus moment for this sector, as it did for paint stocks.
Wall Street’s session on Tuesday was again a mixed one as tech stocks continued to pressure the S&P 500 and the Nasdaq, while the Dow Jones outperformed. All eyes are now on Nvidia’s results, which will be reported after the bell tonight, US time. “I think as the earnings report comes out tomorrow, my expectation is it’s going to be a lot like September,” NYU Stern School of Business finance professor Aswath Damodaran said Tuesday on CNBC’s “Closing Bell.”
Tuesday was yet another session where foreign institutions continued to remain net sellers in the cash market, while domestic institutions turned out to be buyers yet again.
The formation of a bullish candle pattern on Tuesday and slowing down of the selling momentum near the support of 22,450 signals chances of an upside bounce from the lows in the short-term, said Nagaraj Shetti of HDFC Securities.
Rupak De of LKP Securities said that the sentiment continues to favour the bears as the Nifty has remained below the 21-EMA on the hourly chart through Tuesday’s session, indicating selling on every bounce. Support is at 22,500, below which sentiment may worsen further. 22,650, 22,750 and 22,800 are resistances on the upside.
Kotak Securities’ Shrikant Chouhan believes that the current market direction is non-directional and that 22,600 will be an immediate breakout level for the bulls, taking the index higher to 22,700 levels. On the flip side, a fall below 22,500 can drag the index down to 22,400 – 22,350 levels.
A non-directional market on Tuesday also resulted in a non-directional Nifty Bank index as that too traded only in a narrow 300-point range on Tuesday. However, while it did defend 48,500 on the downside, the index ended very close to the lowest point of the day, which may be a cause of concern.
Om Mehra of SAMCO Securities said that the Nifty Bank remains below all key moving averages, indicating persistent weakness. On the flip side, it is near the lower Bollinger band, indicating a possibility of a mean reversion towards the middle band, which is near 49,050. In case a key support of 48,400 is breached, the Nifty Bank may fall to 48,200 levels, he added.
What Are The F&O Cues Indicating?
Short covering was seen in these stocks on Tuesday, meaning a decline in Open Interest but an increase in price:
| Stock | Price Change | OI Change |
| Colgate-Palmolive | 1.39% | -67.52% |
| M&M | 1.75% | -67.52% |
| Max Healthcare | 3.54% | -57.54% |
| Bajaj Finance | 1.16% | -58.25% |
| Bharti Airtel | 2.20% | -55.37% |
Unwinding of long positions was seen in these stocks on Tuesday, meaning a decline in both price and Open Interest:
| Stock | Price Change | OI Change |
| Dr. Reddy’s Laboratories | -3.22% | -48.05% |
| Bank of Baroda | -2.00% | -48% |
| Syngene | -1.79% | -46.50% |
| HPCL | -3.33% | -45.53% |
| Varun Beverages | -4.35% | -43.64% |
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