Stock market outlook July 04: GIFT Nifty tops 24,450; FIIs up long bets

All you need to know before the Indian stock market opens for trade on Thursday: The FIIs long-short ratio in index futures rose to 5:1; meaning more than 5 long positions for every short trade.

Pre-market update Thursday, July 04, 2024: The BSE Sensex and the NSE Nifty are poised to climb newer heights in opening trades, on the back of positive Asian cues and aggressive long bets by FIIs in the derivatives segment.

At 07:00 AM, GIFT Nifty futures quoted around 24,460 levels, indicating a likely gap-up of nearly 100-odd points on the Nifty 50 index.

Global mood

Overnight, the US market ended on a mixed note, with the  S&P 500 and NASDAQ scaling fresh record highs led by tech shares. The S&P 500 gained 0.5 per cent, and NASDAQ added 0.9 per cent. Dow Jones, however, ended 0.1 per cent lower ahead of the trading holiday today. On Friday, the market will seek cues from the jobs data.

Meanwhile, minutes of the recently concluded Federal Reserve meeting showed that officials acknowledged the US economy appeared to be slowing and that "price pressures were diminishing," but still wanted further evidence before committing to interest rate cuts.

The US 10-year bond yield eased to 4.356 per cent. Among commodities, Gold futures rose to $2,370 per ounce, while Brent Crude Oil futures traded firmly at $87 per barrel.

Markets, in the Asia-Pacific region, logged strong gains in morning trade. The Australian stock indexes – the S&P ASX 200 and All Ordinaries; and Malaysia’s Kospi rallied 1 per cent each. Nikkei was up 0.4 per cent each.

FII, DII flows

Foreign institutional investors (FIIs) were net buyers of worth Rs 5,484 crore on Wednesday. On the other hand, domestic institutional investors (DIIs) net sold shares to the tune of Rs 924 crore on July 02.

In the derivatives segment, FIIs net bought index futures worth Rs 2,487.34 crore. FIIs added 2,599 contracts in Nifty futures, while net bought 28,941 Bank Nifty futures yesterday.

FIIs index long-short ratio jumped to 5.1:1; meaning more than 5 long index bets for every single short position in index futures. The FIIs net index longs stood at 83.62 per cent, while shorts at 16.38 per cent.

On the other hand, DIIs and retail investors index long-short ratio stands close to 0.5:1; meaning nearly 2 index short positions for every long trade. 

Trading strategy for Thursday, July 04 - Should you be a buyer or seller in the Nifty, Bank Nifty today? Here’s what market experts recommend:

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

Technically, the Nifty has broken the 24,200 barrier and formed a doji candlestick pattern. Furthermore, the index is forming a higher-top, higher bottom pattern, indicating an uptrend. As long as the index holds support of 23,990, it may attempt to test the levels of 24,500-24,600.

The Nifty Bank is consolidating in the band of 52,000 - 53,200. If the index sustains above 53,200, then the rally could extend towards 54,000 - 54,200 levels.

Ashwin Ramani, Derivatives & Technical Analyst, SAMCO Securities

Strong put writing was observed at the 24,200 Strike in Nifty while the 24,300 Strike saw call writing, leading to Nifty trading in a range throughout the day. With the FPI long-short ratio of 82 per cent and a put-call ratio (PCR) of 1.45, the market appears to be overheated. Therefore, it is advisable to adopt a cautious approach when building aggressive fresh long positions.

The call writers (3.55 contracts) lead the put writers (1.78 lakh contracts) at the 24,300 strike and the option activity at this strike will provide cues about Nifty’s future direction.

On the Bank Nifty, all Strikes from 52,000 until 53,000 saw call writers (Bears) exiting and put writing, which led the strong up move in the Bank Nifty on Wednesday.

The 53,000 Strike witnessed significant put writing. The put writers, the Bulls with 92K contracts lead marginally the call writers, the Bears, having 76K contracts, at the 53,000 Strike and the option activity at this strike will provide cues about Bank Nifty’s upcoming direction.

Om Mehra, Technical Analyst, SAMCO Securities

Over the last eight trading sessions, the Nifty has consistently maintained its positive trend, never closing below the previous day's low. The Nifty’s support levels remain around 24,100 while surpassing 24,330 could potentially advance further, targeting the 24,400 to 24,500 range.

The 9-day moving average (DMA) at 52,400 serves as an immediate support level for the Bank Nifty. On the upside, resistance is marked at the Fibonacci retracement levels of 127.8 per cent (53,550) and 161.8 per cent (53,900). The daily Relative Strength Index (RSI) stands positively at 67, indicating a sustained bullish momentum.

Rupak De, Senior Technical Analyst, LKP Securities

The bulls have regained control from the bears, pushing the index above 24,300. This shift in sentiment has once again favored long trades in the market. Moving forward, the trend might remain strong in the near term as long as the Nifty stays above 24,000. On the higher end, the index might move towards 24,500. However, a fall below 24,000 could lead the index into consolidation.

Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities

The Bank Nifty is trading in a strong uptrend with higher high and higher low formations on the daily chart. The immediate support now stands at 52,500, and a dip towards this support would be an ideal opportunity to initiate fresh long positions.

Primary market update

Emcure Pharma Rs 1,952 crore IPO sailed through on Day 1 of the offer period, with 1.32 times subscription. Keen interest was shown by the non-institutional investors (NIIs) segment.

SME - Bansal Wire Rs 745 crore IPO was subscribed 1.76 times. NIIs and retail category saw bidding up to 2.5 times the allotted quota on Day 1 of the offer period.