• Sat. Jun 22nd, 2024

Market Analysis: Your Monday Trading Blueprint.

ByNishat Manzar

Sep 10, 2023

As the week unfolds, traders and investors are keeping a close eye on the Nifty, and its performance between 19,700 and 19,600. 

Experts are cautiously optimistic, predicting a potential rally to 20,000 in the upcoming sessions, while acknowledging the possibility of a correction before reaching this milestone.

The market has shown robust performance in recent weeks, with the Nifty50 breaching the significant 19,800 mark on September 8, marking a seven-week high. Maintaining levels between 19,700 and 19,600 is critical for the Nifty’s further ascent to 20,000. 

Nonetheless, some market watchers anticipate a period of consolidation before the bullish trend continues.

Analyzing the daily charts, the Sensex posted a gain of 333 points, reaching 66,599, while the Nifty rose by 93 points to 19,820. This uptrend has manifested in a bullish candlestick pattern for six consecutive days, characterized by higher highs and higher lows.

Nagaraj Shetti, a technical research analyst at HDFC Securities, observed, The market is ready to break above the present resistance level of 19,865, having lately surmounted a number of obstacles.

Shetti pointed out that there is immediate support at 19,650 and that the short-term trend is still bullish.

The market breadth appears favorable for bulls, as both the Nifty smallcap and midcap 100 indices registered gains of 0.6% and 0.95%, respectively. 

The India VIX, commonly referred to as the fear index, decreased by 0.85%, moving from 10.87 to 10.78.

Here are key support and resistance levels for the Nifty:

  • Support levels: 19,751, 19,718, and 19,665
  • Resistance levels: 19,858, 19,891, and 19,945

Bank Nifty, referred to as “Nimble Bank,” maintained its upward trajectory, crossing the crucial 45,000-point mark on September 8. The daily charts for the index reflected a gain of 278 points, closing at 45,156 and forming a bullish candlestick pattern characterized by a significant upper shadow and a minor lower shadow.

Jatin Gedia, a technical research analyst at Sharekhan by BNP Paribas, expressed confidence in the ongoing bullish momentum.

He said, “There has been ongoing buying demand since its breakout from the consolidation during the prior trading session. A bullish sign is a momentum indicator’s positive crossover. The growing trend is expected to continue overall, and we anticipate reaching our short-term goals of 45,500.

The pivot point calculator indicates the following support and resistance levels for Bank Nifty:

  • Support levels: 44,899, 44,764, and 44,546
  • Resistance levels: 45,336, 45,470, and 45,689

Now, let’s delve into the options data:

Call Options:

The Nifty faces substantial resistance at the 20,000 strike, which holds the highest weekly call open interest (OI) with 79.27 lakh contracts. The 20,200 strike follows closely with 51.97 lakh contracts, trailed by the 19,900 strike with 50.9 lakh contracts.

Additionally, the highest call strike at 20,000 attracted 29.97 lakh contracts, with the subsequent strikes at 20,200 and 20,500 accumulating 23.05 lakh and 20.5 lakh contracts, respectively.

On the flip side, the most prominent call unwinding occurred at the 19,700 strike, resulting in a reduction of 13.73 lakh contracts. The 19,600 and 19,400 strikes also experienced unwinding, shedding 8.22 lakh and 77,000 contracts, respectively.

Put Options:

At the 19,600 strike, the put side had the largest open interest, reaching 64.07 lakh contracts, giving it a possible support level going forward. Strikes at 19,700, totaling 57,58 lakh contracts, and 19,000, totaling 55,55 lakh contracts, came next.

For put writing, the 19,800 strike had the highest open interest, with 37.14 lakh contracts, while the 19,700 and 19,000 strikes closely followed with 26.81 lakh and 19.33 lakh contracts, respectively.

Initiated at the 18,900 strike, put unwinding resulted in a decline of 4.18 lakh contracts, and was followed by the 18,800 strike, which showed a decline of 74,100 contracts.

When it comes to stocks that attracted investor interest, ICICI Lombard General Insurance, Pidilite Industries, Astral, Britannia Industries, and Dabur India had a high percentage of delivery.

Market participants also closely monitored 52 stocks displaying a protracted build-up, which included companies like Indian Energy Exchange, Container Corporation of India, PFC, IRCTC, and ONGC. A protracted build-up indicates an increase in long positions, marked by rising open interest (OI) and prices.

In contrast, 35 stocks—including Balrampur Chini Mills, SRF, SAIL, SBI Life Insurance Company, and Bharat Forge—saw long unwinding based on OI %. Price and OI reductions are the hallmarks of long unwinding.

Furthermore, 37 stocks displayed a short build-up, signifying an increase in short positions driven by rising OI and falling prices. These stocks included Glenmark Pharma, ITC, Dr. Lal PathLabs, Chambal Fertilizers and Chemicals, PVRInox, and ITC.

On a positive note, 62 stocks saw short-covering based on the OI percentage, exemplified by a reduction in OI and an uptick in prices. Stocks like United Breweries, DLF, Punjab National Bank, BHEL, and ICICI Prudential Life Insurance featured on this list.

In other market developments, promoter Anand Vijay Sankeshwar divested a 4% stake in VRL Logistics, while SBI Mutual Fund made significant purchases worth Rs 131.36 crore.

As part of its investing plan, Follis Advisory LLP purchased a 2.3% ownership share in Jyoti Structures.

Looking ahead, investors are gearing up for key events. Senior representatives from Zee Entertainment Enterprises are scheduled to attend the 30th CITIC CLSA Investors’ Forum in Hong Kong, while discussions with institutional investors regarding MTAR Technologies are also on the agenda.

Several stocks are set to make their market debuts, including Rishabh Instruments and Ratnaveer Precision Engineering on September 11. Additionally, Vakrangee and Aaviskaar Capital have finalized a binding term sheet for the purchase of a 48.5% stake in Vortex Engineering, a prominent manufacturer of automated teller machines.

Adani Enterprises has entered into a joint venture agreement with Kowa Holdings Asia Pte Ltd for the sale and marketing of green hydrogen, green ammonia, and their derivatives.

SJVN Green Energy has inked a power-purchase agreement for an 18 MW solar power plant, expected to be completed by August 2024.

Schaeffler India has acquired a 100% stake in KRSV Innovative Auto Solutions.