Market outlook July 24: GIFT Nifty hints tepid start post Budget volatility

All you need to know before the market opens today: Q1 results, post Budget reactions to guide trading sentiment for the Sensex and Nifty as global markets seem directionless. 2 new listings today.

Stock market preview, Wednesday, July 24, 2024: Equity benchmark indices are likely to start today’s trading session on a tepid note following the significant volatility on the Budget Day yesterday.

At 07:00 AM, GIFT Nifty futures quoted around 24,410, hinting at a likely negative start to the trading action on the Nifty 50 index.

Among the key takeaways from the Budget 2024; were the hike in long-term capital gains tax (LTCG) to 12.5 per cent and short-term capital gains tax (STCG) to 20 per cent. Also, a hike in Securities Transaction Tax to 0.02 per cent for futures trading, and 0.1 per cent in case of options.

Watch: BS Budget show – Understanding the fine print

Participants will take a fresh look at the market post Budget; may seek cues from corporate earnings as cues from global peers are inconclusive for the day ahead. Axis Bank, Bajaj Finserv, Federal Bank, Jindal Steel, Larsen & Toubro and SBI Life are among the key companies scheduled to announce Q1 results on Wednesday.

That apart, HSBC Manufacturing and Services data will be released today.

Global mood

Overnight in the US, benchmark indices ended marginally in red amid mixed  earnings. The S&P 500, Dow Jones and NASDAQ slipped 0.1–0.2 per cent.

The US 10-year bond yield quoted around 4.255 per cent. Among commodities, Gold futures were quoting around the $2,400-mark, while Brent Crude Oil dipped below $82 per barrel.

Cues from the Asian peers were indecisive as Nikkei and Kospi traded flat, while Straits Times was down 0.4 per cent.

FII, DII trading activity

Foreign institutional investors (FIIs) net sold shares to the tune of Rs 2,975.31 crore in the cash market on July 23. Domestic institutional investors (DIIs), on the other hand, were net buyers of stocks worth Rs 1,418.82 crore on Tuesday.

In the derivatives segment, FIIs net sold 54,771 contracts of index futures, for a consideration of Rs 3,659.88 crore yesterday. FIIs net sold 32,919 contracts of Nifty futures, and 19,283 contracts of Bank Nifty futures.

Pursuant to which, FIIs index futures long-short ratio dropped sharply to 2.8:1 as compared to a high of 5.2:1 on July 05. This ratio now signifies that FIIs hold near about 3 long positions in index futures for every bet on the short side. The FIIs longs in index futures dropped to 73.60 per cent, while shorts rose to 26.40 per cent.

On the other hand, retail investors significant cut their short positions in index futures from 62.03 per cent to 57.88 per cent. DIIs long-short ratio continues to remain around 0.5:1; meaning 2 index short bets for every long trade. 

Trading strategy for Wednesday, July 24 - Should you be a buyer or seller in the Nifty, Bank Nifty today? Here’s what market experts recommend:

Ashwin Ramani, Derivatives Analyst, SAMCO Securities

The Nifty has formed a hammer pattern on the daily chart, which is considered to be a bullish reversal signal. Strong put writing was observed at the 23,900 & 24,000 Strike, whereas the 24,500 & 24,600 Strike saw significant call writing. The option activity at the 24,500 Strike will provide cues about Nifty’s intra-day direction today.

On the Bank Nifty, all Strikes from 52,200 until 52,500 saw call writing and put writers (Bulls) exiting. The option activity at the 51,500 Strike will provide cues about Bank Nifty’s Intra-day direction on Wednesday.

Dhupesh Dhameja, Technical Analyst, SAMCO Securities

On the daily chart, the Nifty completed its mean revision retest of the 20-day moving average and is still trading within an upward sloping channel, closing above 24,450. The Relative Strength Index (RSI) on the hourly timeframe has reached a shorter-term extreme, indicating a possible pullback.

Immediate support lies at 24,400, with strong resistance at 24,570. To regain bullish momentum, the Nifty must sustain above 24,400. Failure to do so could trigger profit booking, potentially pushing the index down to 24,200.

The Bank Nifty is approaching a critical breakdown point at 51,700 and has closed below the 20-day moving average, signaling weakness. A decline below 51,700 could lead to increased selling pressure and further losses.

Rajesh Bhosale, Equity Technical Analyst, Angel One

Key events like the Budget often set the tone for future trends, but Tuesday’s closing did not show significant changes. The impact of such events can sometimes be seen in the following sessions, making the next few days crucial.

Observing the daily chart, the market shows a defined range. The upper end, marked by a bearish engulfing pattern formed on Friday at 24,850, serves as a key resistance, followed by the psychological level of 25,000. On the downside, the panic low around the 20-EMA at 24,100 – 24,000 acts as a strong support zone.

We expect the Index to hover within the 24,000 – 25,000 range and anticipate trending moves after some consolidation.

Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates

Technically, the Nifty on a daily scale formed a hammer candlestick pattern. As per this pattern, Tuesday’s low of 24,074 will act as strong support for the index. On the upside, the high of the bearish engulfing candle is placed near 24,855. Until the index conquers these levels, a sell-on-rise strategy needs to be adopted in Nifty.

The Bank Nifty on a daily scale is forming a lower top and lower bottom pattern, indicating weakness. On the upside, 52,000 and 52,550 will act as resistance points for the index, while on the downside, 51,200 and 51,000 will act as key support points.

Stocks in F&O ban period

3 stocks - GNFC, Aeronautics and SAIL are in futures & options (F&O) ban period on Wednesday. 

New listings 

Kataria Industries and Macobs Technologies IPOs to debut on the bourses today. Grey market premium data indicates a likely robust debut for Kataria, up to 90 per cent premium; while Macobs may see a modest 15 per cent listing gain.

Primary market update

Chetana Education (Rs 45.90 crore) and Mangalam Infra and Engineering (Rs 27.62 crore) IPOs to open for subscription on Wednesday on the NSE SME platform. 

Meanwhile, VL Infraprojects IPO was subscribed 35.5 times at the end of Day 1 of the offer period. SAR Televenture and RNFI Services IPOs to close today; the former has seen 1.8 times subscription, while the latter is subscribed 21.8 times thus far.

Additionally, VVIP Infratech IPO was subscribed 6.2 times on the BSE SME platform.