 "Hindenburg vs Sebi, Adani stocks, global markets: Guide for Nifty on Aug 12")
Trading guide for Monday August 12, 2024: Indian stocks are likely to start trade for the week on a jittery note amid the fresh salvo from Hindenburg Research against investments in Adani stocks, and a direct attack on Sebi chief Madhabi Puri Buch; the latter has rebutted all such allegations.
Both Sebi and the Buch issued separate statements rebutting all the allegations, terming them baseless and an attempt at character assassination.
Over the weekend, the US-based short-seller Hindenburg Research alleged that Securities and Exchange Board of India (Sebi) chairperson Madhabi Buch and her husband Dhaval Buch, had stake in obscure offshore entities used in the alleged Adani money siphoning scandal.
Hindenburg said that Indian stock market regulator Sebi took no public action against Adani Group and instead sent the US-based short-seller a ‘showcause’ notice. Analysts, however, believe the market at most could see a knee-jerk reaction on Monday post these accusations. READ MORE
At 07:00 AM, GIFT Nifty futures quoted around 24,370 levels – hinting at a likely dip of 30-odd points on the NSE Nifty 50 index at the opening bell.
Going ahead into the week, the market will continue to closely track any major news flow around the Hindenburg and Sebi clash. On Monday, post market hours, the IIP, manufacturing and inflation numbers will be announced. Global markets trend will also be on investors’ radar amid buzz of a likely US interest rate cut.
Global cues
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On Friday, the US market ended with steady gains as traders contemplated that the worst of Yen carry forward trade unwinding based selling was over. Dow Jones gained 0.1 per cent, the S&P 500 and NASDAQ jumped 0.5 per cent each.
The US 10-year bond yield remained steady below the 4 per cent mark. Whereas, Gold futures quoted around $2,470 levels, and WTI Crude Oil futures inched closer to $77 per barrel.
In Asia this morning, Japan’s Nikkei advanced 0.6 per cent. Kospi and Taiwan gained 1 per cent each, while Straits Times slipped 0.8 per cent.
Technical setup on the Nifty, Bank Nifty chart for Monday August 12, 2024
Nagaraj Shetti, Senior Technical Research Analyst
On Friday, a small candle was formed on the daily chart with minor upper and lower shadow and with gap up opening. The Nifty is currently placed at the edge of the key resistance of around 24,350 – 24,380 levels, which is a lower end of previous sharp opening downside gap of August 05. Hence, further up move from here could possibly result in complete filling of the said gap around 24,690 levels.
The range movement of few sessions is now on the verge of upside breakout. A decisive move above 24,450 levels could pull Nifty towards the next hurdle of 24,700 levels in the near term. Immediate support is at 24,100 levels.
Om Mehra, Technical Analyst, SAMCO Securities
The Nifty has formed a candle with a smaller body on the daily timeframe, indicating indecisiveness. Although Nifty breached the 24,400 resistance level, it failed to close above it, leaving the gap unfilled. The next significant hurdle is at 24,500; if surpassed, the index might reach 24,700.
The Bank Nifty hangs near the 23.6 per cent Fibonacci retracement level which is placed around 50,520 and remains below its 20- and 50-day moving averages. The daily RSI currently stands at 41, indicating a slight positive divergence, which suggests potential upward momentum.
If Bank Nifty manages to break above the 50,800 level, it could drive the index higher. Conversely, a decline below 50,000 could weaken the short-term outlook.
Dhupesh Dhameja, Technical Analyst, SAMCO Securities
The market outlook has shifted from bearish to sideways. The Nifty is encountering strong resistance at the 24,400-24,450 level, which acts as a critical neckline. Trading within the 20 and 50 Daily Moving Averages is creating pressure from both sides. A sustained break above 24,450 would signal the continuation of the upward trend, while solid support at 23,950 offers a safety net on the downside. A decisive move beyond this range is essential to gain momentum in the index.
The Bank Nifty finds strong support from the confluence of its 100-day EMA and an upward-sloping trend line, suggesting that a strong momentum move may be pending. On the upside, the index is struggling to sustain above the 50,700-50,900 levels, while on the downside, strong support is emerging around 49,900. As long as the index trades within this range, momentum is likely to remain subdued, leading to potential intraday fluctuations. However, a sustained move above 50,900 could trigger strong short-covering in the Banking Index.
Rajesh Bhosale, Equity Technical Analyst, Angel One
Last week was largely dominated by bearish sentiment, but the bulls managed to defend key support levels with conviction. Prices have now entered a corridor of uncertainty, with the next trend not very clear.
The weekly chart shows a bearish gap at higher levels, suggesting weakness, yet there is also some buying interest at lower levels. On the daily chart, after Monday’s sell-off, prices traded within a defined range of 24,000 – 24,400 throughout the week. The upper end of this range aligns with the 20 EMA and the bearish gap, while the lower end coincides with the 50 EMA.
Looking at the week ahead, momentum could be triggered if prices break out of this range. A breakout above 24,400 – 24,450 might generate optimism, potentially filling the recent gap at 24,700. However, given the ongoing global uncertainty, any bounce could be an opportunity to reduce long positions.
On the downside, support is seen at 24,100 – 24,000 and a break below this range could lead to further declines in the near term.
Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates
Technically, on a weekly scale, the Nifty has formed a hammer candle, indicating strength. According to this pattern, if the index sustains above 24,420, it could trigger a fresh rally towards the 24,600-24,700 levels. Thus, a buy-on-dips strategy should be adopted for Nifty. On the downside, 24,000 will act as a major support level, where the 50-DEMA support is placed.
The Bank Nifty too has formed a hammer pattern on the weekly scale, indicating strength. If the index manages to sustain above 50,710, it could trigger a fresh rally towards the 51,000-51,200 levels. Therefore, a buy-on-dips strategy should be adopted for Bank Nifty. On the downside, 49,650 will act as firm support for the index.
Where is the big money moving? Here’s an update on the latest FII, DII trading activity
On Friday, after a gap of 5 trading sessions, foreign institutional investors (FIIs) turned net buyers with purchases of stocks worth Rs 406.72 crore; thus far in August FIIs have net sold shares to the tune of Rs 20,360.48 crore in the cash market. On the other hand, domestic institutional investors (DIIs) net bought shares worth Rs 3,979.59 crore on August 09, taking their monthly buy tally to Rs 23,500 crore.
In the derivatives segment, FIIs net bought 7,384 contracts of index futures for a consideration of Rs 460.98 crore on August 9. FIIs net purchased 6,485 contracts of Nifty futures; 711 contracts of Bank Nifty futures and 166 contracts of MidCap Nifty futures.
Pursuant to which, FIIs long-short ratio in index futures stood inched higher to 1.1:1 – this ratio implies that foreign investors hold little more than 1 long position in index futures for every single bet on the short side of trade. The FIIs longs in index futures stood at 52.14 per cent.
Stocks in F&O ban period
A total of 15 stocks are placed under the futures & options ban period for Monday, August 12 namely - Aditya Birla Capital, Aditya Birla Fashion Retail, Bandhan Bank, Biocon, Birlasoft, GNFC, Granules India, Hindustan Copper, India Cements, IndiaMart Intermesh, LIC Housing Finance, Manappuram Finance, PNB, RBL Bank and SAIL.
Primary market update
Saraswati Saree Depot Rs 160 crore IPO to open for subscription today in the price band of Rs 152 – Rs 160 per share.
That apart – Positron Energy Rs 51.20 crore IPO and Sunlite Recycling Industries Rs 30.24 crore IPO to open for subscription on the NSE SME platform.
Meanwhile, Aesthetik Engineers IPO was subscribed 47.73 times at the end of Day 2 of the offer period on the NSE SME platform.