Market Trend
The market is not out of woods yet, though there was a rebound on May 10 after consistent correction since hitting all-time high in the previous week. As long as the Nifty holds 21,900, the low of long bearish candle of May 9 and which also coincides with the rising support trendline, the consolidation is expected to continue and the index may face resistance at 22,200-22,300 levels, but the breaking of 21,900 can drag it towards 21,775, the low of April month, experts said.
On May 10, the BSE Sensex climbed 260 points to 72,665, while the Nifty 50 rose 98 points to 22,055 and formed small bullish candlestick pattern with minor upper and lower shadow on the daily charts.
Technically, this pattern indicates temporary pause in the market after a sharp decline. Nifty placed at the crucial trendline support around 21,900 and still there is no indication of any higher bottom reversal pattern forming at the lows, Nagaraj Shetti, senior technical research analyst at HDFC Securities said.
Nifty on the weekly chart formed a long bearish candle with minor lower shadow. After the formation of Long Legged Doji at new highs in the previous week, Nifty forming a long bear candle during the last week indicates negative bias.
Shetti feels having placed at the key trendline support, there is a possibility of minor upside bounce in the short term, but the market could eventually break down the present support of 21,900-21,850 levels and could slide down to 22,700-22,600 in the near term. "Immediate resistance is at 22,300 levels."
Jigar S Patel, senior manager - equity research at Anand Rathi, also feels the index is nearing the lower boundary of an upward channel, and breaching the same could signal deeper market concerns. "Looking ahead, a drop below 21,900, the previous swing low of 21,777, may induce market panic," he said.
Meanwhile, the elevated volatility also seems to be keeping the bears in action against bulls. India VIX, the fear gauge, rallied 81 percent in the past 12 consecutive sessions, to 18.47 levels, the highest closing level since October 13, 2022.
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Key support and resistance levels on the Nifty and the Bank Nifty
The pivot point calculator indicates that the Nifty 50 may take immediate support at the 21,976 level, followed by 21,934 and 21,865 points. On the higher side, the index is expected to face resistance at the 22,072 level, followed by 22,157 and 22,227 points.
Meanwhile, the banking index tried to claw back, but failed to hold on to those gains and finally settled 67 points lower at 47,421, continuing weakness for eighth straight session. The index has formed small negative candle with long upper shadow on the daily charts, indicating selling pressure at higher levels, but considering it is near the middle of Bollinger band, the pull back rally can't be ruled out in coming days, experts said.
"The Bank Nifty is approaching the 20-week moving average placed at 47,240 and thus a sharp decline from current levels appears unlikely," Jatin Gedia, technical research analyst at Sharekhan by BNP Paribas said.
Hence, he expects a relief rally during the next week.
According to the pivot point calculator, the Bank Nifty index is likely to take support at 47,322, followed by 47,191 and 46,979. On the higher side, the index may see resistance at 47,472, followed by 47,878 and 48,090.
According to the weekly options data, the 23,000 strike owned the maximum Call open interest, with 68.44 lakh contracts. This level can act as a key resistance for the Nifty in the short term. It was followed by the 22,500 strike, which had 54.7 lakh contracts, while the 22,800 strike had 48.22 lakh contracts.
Meaningful Call writing was seen at the 22,800 strike, which saw an addition of 15.6 lakh contracts. It was followed by 22,500 and 22,900 strikes that added 14.49 lakh and 10.25 lakh contracts.
The maximum Call unwinding was visible in the 23,000 strike, which shed 4.84 lakh contracts, followed by 21,900 and 22,300 strikes, which shed 43,250 and 29,200 contracts, respectively.
On the Put side, the maximum open interest was seen at 21,000 strike, which can act as a key support level for the Nifty with 58.24 lakh contracts. It was followed by the 22,000 strike, comprising 45.6 lakh contracts and then the 21,500 strike, with 32.95 lakh contracts.
The maximum Put writing was visible at the 21,000 strike, which saw an addition of 27.77 lakh contracts, followed by 22,000 and 21,600 strikes, with 15.28 lakh and 9.71 lakh contracts additions, respectively.
Put unwinding was observed at the 22,200 strike, which shed 1.6 lakh contracts. This was followed by 22,600 and 20,700 strikes, with a reduction of 60,400 and 43,925 contracts, respectively.
Stocks with high delivery percentage
A high delivery percentage reflects investor interest in a stock. Kotak Mahindra Bank, United Spirits, Shriram Finance, Voltas, and Infosys saw the highest delivery among the F&O stocks.
A long build-up was seen in 68 stocks, including JK Cement, ABB India, Dr Lal PathLabs, Hindustan Copper, and Apollo Tyres. An increase in open interest (OI) and price indicates a build-up of long positions.
Based on the OI percentage, 15 stocks saw long unwinding, which included Godrej Properties, Mahanagar Gas, L&T Finance, State Bank of India, and ICICI Bank. A decline in OI and price indicates long unwinding.
23 stocks see a short build-up
A short build-up was seen in 23 stocks, including Cipla, ACC, Birlasoft, L&T Technology Services, and M&M Financial Services. An increase in OI, along with a fall in price, points to a build-up of short positions.
Based on the OI percentage, 81 stocks saw short-covering, which included Coforge, BPCL, Lupin, Can Fin Homes, and Pidilite Industries. A decrease in OI, along with a price increase, is an indication of short-covering.
The Nifty Put-Call ratio (PCR), which indicates the mood of the market, rose to 0.91 on May 10, from 0.90 levels in the previous session.
The increasing PCR or higher than 0.7 or surpassing 1 means traders are selling more Put options than Calls options, which generally indicates the firming up of a bullish sentiment in the market. If the ratio falls below 0.7 or moves towards 0.5, then it indicates selling in Calls is higher than selling in Puts, reflecting a bearish mood in the market.
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UPL, DLF, Zomato, Jindal Steel & Power, Varun Beverages, Aditya Birla Capital, BLS E-Services, Chalet Hotels, GIC Housing Finance, Ind-Swift Laboratories, INOX India, C E Info Systems, and Tube Investments of India will release March quarter earnings on May 13.
Stocks in News
Tata Motors: The passenger and commercial vehicles maker has recorded consolidated net profit at Rs 17,407 crore for quarter ended March FY24, growing 222 percent over corresponding period of previous fiscal driven tax credit of Rs 8,159 crore and strong operating numbers. Revenue from operations grew by 13.3 percent year-on-year to Rs 1,19,986 crore for the quarter.
Eicher Motors: The automobile company has reported standalone net profit at Rs 983.3 crore for March FY24 quarter, growing 32 percent over the same period of previous fiscal, backed by strong operating numbers. Revenue from operations grew by 9.4 percent YoY to Rs 4,192 crore for the quarter.
Union Bank of India: The public sector lender has registered a 19 percent on-year growth in net profit at Rs 3,311 crore for the fourth quarter of fiscal year 2024, with 20 percent on-year decline provisions. Net interest income grew by 14.4 percent year-on-year to Rs 9,437 crore for the quarter.
ICICI Bank: Bijith Bhaskar has resigned as Head – Cards, Payment Solutions, E-Commerce Ecosystem, Merchant Ecosystem, Consumer Finance of the bank. He was a part of the Senior Management Personnel Group.
Zydus Lifesciences: The pharma company has received final approval from the United States Food and Drug Administration (USFDA) to market Dexamethasone tablets in the US. Dexamethasone is used to treat conditions such as arthritis, blood/hormone disorders, allergic reactions, skin diseases, eye problems, breathing problems, bowel disorders, cancer and immune system disorders.
Funds Flow (Rs crore)
Foreign institutional investors (FIIs) net sold Rs 2,117.50 crore shares, while domestic institutional investors (DIIs) pumped in Rs 2,709.81 crore worth shares on May 10, provisional data from the NSE showed.
Stocks under F&O ban on NSE
The NSE has added Hindustan Copper to the F&O ban list for May 13, while retaining Balrampur Chini Mills, Canara Bank, GMR Airports Infrastructure, Vodafone Idea, Punjab National Bank, SAIL, and Zee Entertainment Enterprises to the said list. Aditya Birla Fashion & Retail, and Piramal Enterprises were removed from the said list.
Securities banned under the F&O segment include companies where derivative contracts cross 95 percent of the market-wide position limit.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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