It is difficult to fathom the market being in the red on a day that two of the biggest Nifty constituents – HDFC Bank and Reliance Industries ended the day with healthy gains. But that is how Monday’s trading session turned out to be on Dalal Street. Friday’s rebound from the lows of 24,564 was short-lived as despite the best efforts from HDFC Bank and Reliance Industries, the index ended in the red, without any follow-up buying.

For the 93 points contributed by the Nifty heavyweights to the upside, there was a team of Kotak Mahindra Bank, Infosys, IndusInd Bank, ICICI Bank and Tata Consumer Products to offset those gains.

What would definitely alarm the bulls is the extreme earnings reaction seen in a many companies, mostly on the downside. Tata Consumer at one point fell 10% before ending 7% lower. Kotak Mahindra Bank too, at one point fell 6% before ending 4.5% lower after weak results.

This proves the fact that we are currently in a market where there is “zero” margin for error and even the slightest earnings miss is being punished by the street. IndiaMART (down 17%), RBL Bank (down 13.5%), Mastek (down 6%), CG Power (down 6%), Gravita India (down 6%) are case in point. And these are just a few examples of multiple such earnings misses that were punished by the street.

“I think it is fair to say that,” said Rakshit Ranjan of Marcellus, when asked about whether the margin for error for a lot of these companies is negligible. “That is because of the kind of valuations they have traded at with earnings not being supported and I don’t think this is a one-quarter blip. So a negative reaction should be expected because the earnings these companies (without naming any) reported over the last one to two years, were not sustainable,” Ranjan told CNBC-TV18 on Monday.

The extent of the sell-off in a lot of these broader market companies has also put the spotlight on the correction taking place there as the benchmark indices were grabbing the spotlight in recent times. The Midcap index is down over 5% in the last one month, not alarming by any means, especially considering the run-up the index has seen over the last 12-18 months, but 78 out of the 100 stocks on the Nifty Midcap index have delivered negative returns during the last one month, and that should concern the bulls, more so because the earnings season has only just begun.

Shares of Bajaj Housing Finance, 360 One WAM, City Union Bank, HFCL, Jana Small Finance Bank, Mahindra Logistics, Union Bank of India are some of the broader market names that will be reacting to their results during Tuesday’s trading session.

Bajaj Finance is among the Nifty constituents reporting results on Tuesday, which will have a slew of broader market companies like Adani Energy Solutions, Adani Green, Amber Enterprises, Can Fin Homes, Chennai Petro, ICICI Prudential, Indus Towers, IIFL Securities, M&M financial, ICICI Securities, Persistent Systems, Coforge, Shoppers Stop, SRF, Varun Beverages, Zensar Technologies, Olectra Greentech and Zomato among others report results.

Foreign institutions continued to remain net sellers in the cash market even on Monday but were outbought by the domestic institutions after a few sessions.

Rupak De of LKP Securities believes that 25,000 is a key level for the Nifty and a failure to defend that led to the index falling to levels of 24,700. In case 24,700 breaks on the downside, the selling pressure may intensify but if it manages to hold, a recovery towards 25,050 could be seen.

For Angel One’s Rajesh Bhosale, the 24,600 level is key for the Nifty, which aligns with the 89-Day Exponential Moving Average, as a break below that could trigger a price correction and confirm a bearish breakdown of the head and shoulders pattern. On the flip side, 25,000 to 25,250 remains a key hurdle.

The candle formed on the Nifty’s daily chart on Monday shows the lack of strength in the market for a sustainable upside bounce, said Nagaraj Shetti of HDFC Securities. He said that the underlying Nifty trend is weak and he expects a revisit of the 24,600 – 24,500 lows in the near-term. Immediate resistance is at 25,000.

All the gains made by HDFC Bank were offset by the losses seen in shares of Kotak Mahindra Bank and ICICI Bank, which resulted in the Nifty Bank ending with losses on Monday. The index did open higher, crossed the mark of 52,500 on an intraday basis but could not hold on to Friday’s recovery, eventually ending 600 points off the highs of the session. Yet, the Nifty Bank appears to be in a better position compared to the Nifty when it comes to levels at closing on Monday.

The Nifty Bank has formed a bearish candle but has closed above the 21-Day Exponential Moving Average near 51,915. On the downside, 51,100 – 51,000 zone offers good support for the banking index and Hrishikesh Yedve of Asit C Mehta Investment Interrmediates advises a buy-on-dips strategy on the Nifty Bank till it remains above the mark of 51,000.

What Are The F&O Cues Indicating?

Fresh short positions were seen in these stocks on Monday, meaning a decline in price but an increase in Open Interest:

Stock	Price Change	OI Change
Dalmia Bharat	-1.53%	13.97%
Bharat Forge	-2.64%	6.61%
Bata	-3.12%	6.61%
PI Industries	-3.69%	6.37%
IndiaMART	-17.09%	5.32%

Short Covering was seen in these stocks on Monday, meaning an increase in price but a decline in Open Interest:

Stock	Price Change	OI Change
Tata Chemicals	8.02%	-29.23%
Oberoi Realty	2.77%	-5.95%
HDFC Bank	2.29%	-5.13%
Reliance Industries	0.45%	-4.16%
Asian Paints	1.62%	-4.07%

Unwinding of long positions was seen in these stocks on Friday, meaning a decline in both price and Open Interest:

Stock	Price Change	OI Change
Federal Bank	-1.23%	-5.84%
HPCL	-4.13%	-5.52%
Coforge	-5.99%	-5.52%
Indian Hotels	-1.37%	-5.49%
IRCTC	-3.49%	-3.32%

These are the stocks to watch out for ahead of Tuesday’s trading session:

• Bajaj Housing Finance: Net profit up 21% to ₹545.6 crore from ₹451.1 crore last year. Revenue up 21.1% to ₹2,410.2 crore. Disbursals at ₹12,014 crore, down 11.5% from last year and flat sequentially. Net Interest Income up 13% from last year to ₹713.3 crore. Gross NPA at 0.29% from 0.28% in June. Net NPA at 0.12% from 0.11% in June. Provisions down 73% from last year and 50% sequentially to ₹4.98 crore.
• Tata Motors: Awarded significant contract by Uttar Pradesh State Road Transport Corporation (UPSRTC) to supply 1,000 Tata LPO 1618 diesel bus chassis. The delivery of these bus chassis will take place in phases, in accordance with terms mutually agreed upon by Tata Motors and UPSRTC.
• Jana Small Finance Bank: Disbursements at ₹4,296 crore, up 3.3% sequentially. Disbursal to AUM ratio declines to 15.2% from 24.4% sequentially as tenor increased. AUM up 17.3% to ₹26,411 crore. Advances up 18.3% from last year to ₹24,861.45 crore. Net profit up 40% to ₹171.8 crore. Provisions up 31% from last year and 7.5% from June to ₹210.3 crore. Gross NPA at 2.97% from 2.62% in June. Net NPA unchanged at 0.99%.
• City Union Bank: Net Interest Income up 8.2% from last year to ₹582.5 crore. Net profit up 1.6% from last year and 8% quarter-on-quarter to ₹285.2 crore. Gross NPA at 3.54% from 3.88% last quarter. Net NPA at 1.62% from 1.87% in June. NPA provisions up 150% year-on-year and 118.7% from June to ₹70 crore. Deposits up 8.8% to ₹57,369 crore. Advances up 9.3% to ₹47,771 crore.
• Mahindra Logistics: Net loss narrows to ₹9.6 crore from ₹15.5 crore last year. Revenue up 11.4% to ₹1,521 crore. EBITDA up 23.7% to ₹66.7 crore. EBITDA margin at 4.4% from 3.9%. 3PL contract logistics, cross border and last mile delivery segments delivered strong growth led by account additions, new offerings and a stable cross border pricing environment. Soft demand environment and operating conditions impacted express business. H2 will be stronger driven by festive peak and driven by margin improvement programs across the business.
• Cyient DLM: Net profit up 5.5% to ₹15.4 crore. Revenue up 33.4% to ₹389.4 crore. EBITDA up 34.2% from last year to ₹31.4 crore. EBITDA margin at 8.1% from 8% last year.
• NELCO: Net profit down 28.1% to ₹4.1 crore from ₹5.7 crore last year. Revenue up 7.7% to ₹82.6 crore. EBITDA down 16% to ₹17.5 crore. EBITDA margin at 21.2% from 27.1% last year.
• Rajratan Global Wires: Net profit down 2.3% to ₹19 crore. Revenue up 14.4% to ₹245.3 crore. EBITDA up 11.7% to ₹38 crore. EBITDA margin at 15.5% from 15.8% last year.
• Supreme Petrochem: Net profit up 15.8% to ₹90.3 crore. Revenue up 17.8% from last year to ₹1,505.6 crore. EBITDA up 18% to ₹125.3 crore. EBITDA margin at 8.3%, unchanged from last year.
• RVNL: Has incorporated wholly-owned subsidiary “Company Rail Vikas Nigam Ltd. (One Partner)” in Saudi Arabia.