 "Market outlook July 03: Gap-up open likely; Vraj Iron, Bank Nifty in focus")
Pre-market update for Wednesday, July 03, 2024: The BSE Sensex and the NSE Nifty are likely to start Wednesday’s trading session on an upbeat note tracking gains across global markets.
At 07:00 AM, GIFT Nifty futures quoted around 24,340 levels, indicating a likely gap-up of over 100-odd points on the Nifty 50 index this morning.
On the economic data front, focus will be on HSBC Composite and Services data to be announced today. That apart, Bank Nifty will be on traders radar ahead of the weekly expiry.
In other news, India Meteorological Department (IMD) said the southwest monsoon covered the entire country six days ahead of its normal date, thus boosting prospects of kharif sowing.
Global mood
Overnight, the US market ended with notable gains after Federal Chief Powell said he was encouraged by cooler inflation, and said the latest data signaled that the US was getting back on a disinflationary path. Powell, however, added the Fed will need further evidence before cutting rates.
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NASDAQ jumped 0.8 per cent, Dow Jones gained 0.4 per cent and the S&P 500 added 0.6 per cent. Tonight, the US market will focus on the FOMC minutes ahead of the trading holiday on July 04.
The US 10-year bond yield quoted around 4.44 per cent. Among commodities, Gold and Brent Crude Oil futures remained steady around $2,340 and $86.50 levels.
Markets, in the Asia-Pacific region, exhibited a positive trend on Wednesday morning. Nikkei rose 0.7 per cent. Straits Times was up 0.8 per cent, and Kospi 0.2 per cent. The Australian stock indexes – The S&P ASX 200 and All Ordinaries were also up 0.3 per cent each.
FII, DII flows
Foreign institutional investors (FIIs) were net sellers of stocks to the tune of Rs 2,000 crore on Tuesday. On the other hand, domestic institutional investors (DIIs) net bought shares worth Rs 648 crore.
In the derivatives segment, FIIs turned net sellers in index futures after 17 trading sessions. However, the net index long-short ratio remained extremely bullish at 4.6:1; meaning nearly 5 long index bets for every single short position in the futures segment. The FIIs net index longs stood at 82.10 per cent, while shorts at 17.90 per cent.
FIIs net bought 3,120 contracts in index futures on Monday, amounting to Rs 237 crore. The selling was more focused on Bank Nifty futures, wherein net sold 2,629 contracts.
On the other hand, DIIs and retail investors continued to hold on to their net short in index futures. The former held 63 per cent trades in index shorts, while the latter index shorts stood at 65.74 per cent.
Trading strategy for Wednesday, July 03 - Should you be a buyer or seller in the Nifty, Bank Nifty today? Here’s what market experts recommend:
Ashwin Ramani, Derivatives & Technical Analyst, SAMCO Securities
Strong call writing was observed at the 24,200 Strike in Nifty, which acted as a strong resistance for Nifty on intraday basis. The put writers further strengthened their position at the 24,000 Strike in Nifty, which is likely to act as strong support in the near term. The call writers (2.09 lakh contracts) lead the put writers (76K contracts) at the 24,200 strike and the option activity at this strike will provide cues about Nifty’s future direction.
On the Bank Nifty, all Strikes from 52,300 until 52,900 saw put writers (Bulls) exiting and call writing. The put writers (1.79 lakh contracts) lead the call writers (62K contracts) marginally at the 52,000 Strike and the option activity at this strike will provide cues about Bank Nifty’s upcoming direction.
Om Mehra, Technical Analyst, SAMCO Securities
The Nifty has formed a bearish candle on the daily chart, with similar open and highs. Currently, Nifty mean stands at 24,150, and remaining above these levels indicates bullishness, while remaining below indicates slight weakness in the short-term trend.
The Donchian Channels, which signal bullish and bearish extremes in which the Nifty's position on the hourly chart holds the middle band, pointing towards a neutral outlook.
On the daily time frame, the Bank Nifty has formed a bearish engulfing pattern. The daily RSI stands at 62 but has slipped below its average line. The Fibonacci retracement of 23.6 per cent shows immediate support at 51,500 with resistance at 52,900. A "sell on rise" strategy may be considered for the next session.
Osho Krishan, Senior Analyst - Technical & Derivatives, Angel One
After a sustained period of bullish dominance, there is now a more balanced market sentiment, reflecting a potential sense of exhaustion following the recent rally. Technically, the 24,250 zone showed signs of resilience, which could be seen as an intermediate obstacle for the bulls to overcome.
On the lower end, the pivotal level of 24,000 still holds significant importance, and a decisive breach could trigger some correction in the near future, with immediate downside support at 23,800.
The overbought conditions and recent hesitation at the elevated zone could be seen as an initial signal for a cool-down. Therefore, it's crucial to implement proper risk management strategies at current levels.
Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates
Technically, the Nifty has formed a red candle around resistance of 24,200 levels. If the index sustains above 24,200, then the rally could extend towards 24,500-24,600 levels in the short term.
The Bank Nifty is consolidating in the band of 51,000 - 53,200. Thus, in the short-term, Bank Nifty will find support around 51,000 - 51,100 zone and resistance at 53,000 - 53,200 zone. Since the trend is up, a buy-on-dips strategy should be adopted.
Rupak De, Senior Technical Analyst, LKP Securities
The sentiment is likely to favor selling on rallies until the Nifty moves above 24,250. On the lower end, 24,000 is likely to act as immediate support for the NSE index. A fall below 24,000 might trigger a correction towards 23,850 - 23,700.
Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities
The Bank Nifty index witnessed selling pressure from higher levels and faced rejection at the 52,400 – 52,500 levels. The index remains in a sell-on-rise mode with the next immediate support at the 52,000 -51,800 zone. If the index fails to hold this support, it can witness further selling pressure towards the 51,400-51,300 level.
New listings today
Shares of Vraj Iron and Steel to list today; grey market premium indicated a likely listing gain of 20-odd per cent on the stock.
Diensten Tech to debut on the NSE-SME platform. The stock commanded a premium of up to 70 per cent in the unlisted market.
Primary market update
Bansal Wire Rs 745 crore, and Emcure Pharma Rs 1,952 crore IPO to open for subscription today. The former share sale is in the price band of Rs 243 – Rs 256 per share; while the latter is offering stocks in the price range of Rs 960 – Rs 1,008.