 "Trade setup today: GIFT Nifty up 200 pts; global stocks rally; Ola listing")
Trading guide for Friday August 9, 2024: Benchmark equity indices are likely to start Friday’s trading session on an upbeat note amid a strong pullback in global shares as fears of a likely US recession receded.
At 07:00 AM, GIFT Nifty futures quoted around 24,350 levels – hinting at a likely gap-up of nearly 200 points on the NSE Nifty 50 index.
The equity market has been fairly volatile so far this week, with more downward pressure. Yesterday, the Nifty shed 180 points to settle at 24,117 amid the weekly options expiry, while the BSE Sensex dropped 582 points to 78,886.
Global cues
Overnight in the US, benchmark indices rallied up to 3 per cent after data showed jobless claims dropped to 233,000 in the past week, more than expectations for a reading of 241,000. The bigger than expected drop soothed some fears of a recession.
This aided with some good corporate earnings helped NASDAQ zoom 2.9 per cent. The S&P 500 rallied 2.3 per cent, and Dow Jones gained 1.8 per cent. Tonight the focus will be on US Fed official Barkin’s speech.
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The US 10-year bond yield remained a tad below the 4 per cent mark. Whereas, Gold futures rose to $2,460 levels, while WTI Crude Oil futures advanced to $76 per barrel.
Among other base metals – Nickel was up over 1 per cent. Copper, Aluminium, Zinc and Lead futures traded with gains of around 0.5 per cent each.
This morning in Asia, Japan’s Nikkei surged 1.5 per cent. Taiwan soared 2.7 per cent, and Kospi jumped 1.6 per cent. Straits Times was up 0.4 per cent.
Trading strategy in Nifty, Bank Nifty for Friday August 9, 2024
Deepak Jasani, Head of Retail Research, HDFC Securities
The Nifty has formed a bearish candle on daily charts on Aug 08. It has not been able to enter the down gap area of 24,383 – 24,687 band despite repeated attempts. The Bearish outlook for the near term stays till the highs of 24,800 is breached. The Nifty could stay in the 23,894 – 24,343 band for the near term. Volumes continue to be a worry even as the participation in the broader markets remains limited.
Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities
After showing an upside bounce on Wednesday, the Nifty was not able to surpass the crucial hurdle of 24,350 levels and slipped into weakness on Thursday. A reasonable negative candle was formed on the daily chart with upper shadow, that is placed within a high low range of 24,350 – 24,000 levels. The crucial hurdle of the opening down gap of August 5 is still intact.
The short-term trend for Nifty remains choppy. Lack of follow-through up move and the presence of strong overhead resistance signals some more consolidation or weakness in the short term. A slide below 23,900 could open another round of downward correction. However, a decisive move above 24,350 levels could bring bulls back into action.
Rajesh Bhosale, Equity Technical Analyst, Angel One.
The Nifty continues to trade within a slender range, and on the hourly charts, a symmetrical triangle is forming as the trading range tightens. The lower end of this pattern has moved up to 24,050 – 24,000, and breaking below this level could lead to a drop towards 23,900 and lower in the coming sessions.
Conversely, 24,300 – 24,400 remains a significant resistance, and breaking above this upper range could bring some optimism back to the market. Till then one should continue with the cautious approach, traders are advised to watch levels closely on both sides and trade in the direction of the breakout rather than switching sides frequently.
Om Mehra, Technical Analyst, SAMCO Securities
The Nifty has ranged between 23,893 and 24,383, closing mostly on the lower side. The daily RSI hovering around 45 reveals the weakness currently. The 50 DMA is positioned near 24,000 and a move below this level could push the index toward 23,800.
The Bank Nifty has remained range-bound between Fibonacci retracement levels of 38.2 per cent (50,600) and 50 per cent (49,700). A breakout in either direction will provide clear direction. The Bank Nifty displays a range-bound momentum with a downward bias and is trading below both the 20- and 50- DMA. However, a move above 50,350 could prompt a relief rally towards the 50,600 - 50,750 zone.
Dhupesh Dhameja, Technical Analyst, SAMCO Securities
The Nifty remains trapped within a range established on August 5, with immediate resistance at 24,350. On the 1-hour chart, a bullish base formation is developing after the recent selloff, yet the index has been trading sideways between 24,350 and 23,950 since the start of the week, creating potential intraday Hiccups.
The market outlook has shifted from bearish to a more sideways trend. The Nifty faces strong resistance at the 24,350 level, which is acting as a critical neckline. Trading between the 20- and 50-, Daily Moving Averages (DMA) is exerting pressure from both ends. The RSI is holding strong support at the 40 level; a break and sustained move above 24,350 would signal a resumption of the upward trend. Conversely, on the downside, the index has solid support at 23,950. A decisive breach of either side is needed to find momentum.
The Bank Nifty is currently finding support at the 200-period Exponential Moving Average (EMA) on the 4-hour time frame, with additional support provided by the 100-day EMA. However, it continues to trade within a range established on August 5, with immediate support at 49,850.
Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates
Technically, the Nifty has been taking support near its 50-DEMA, which is currently placed around 23,980. As long as the index holds above this level, a relief rally is likely to continue up to 24,300-24,400 levels. However, sustaining below 23,980 could lead to further weakness in Nifty. On the higher side, immediate resistance for the index is placed near 24,400, where the 21-DEMA hurdle is located.
The Bank Nifty has formed a small green candle on the daily scale and managed to defend the low of the homing pigeon pattern, which was formed on Wednesday. For a fresh bullish trigger, the index needs to sustain above the 50,690 hurdle. On the downside, 49,650 will act as a firm support for the index.
Where is the big money moving? Here’s an update on the latest FII, DII trading activity
On Thursday, foreign institutional investors (FIIs) net sold stocks to the tune of Rs 2,626.73 crore; thus taking the monthly net sales across the Rs 20,000 crore mark in August. On the other hand, domestic institutional investors (DIIs) net bought shares worth Rs 577.30 crore.
In the derivatives segment, FIIs net sold 49,088 contracts of index futures for a consideration of Rs 2,943.20 crore on August 8. FIIs net sold 50,430 contracts of Nifty futures; 314 contracts of MidCap Nifty futures while net bought 1,718 contracts of Bank Nifty futures yesterday.
Pursuant to which, FIIs long-short ratio in index futures rose to 0.9:1 – this is at the highest since June 18. This ratio implies that foreign investors hold near about 1 short position in index futures for every single bet on the long side of trade. The FIIs longs in index futures stood at 51.43 per cent.
Stocks in F&O ban period
Aditya Birla Capital, Aditya Birla Fashion Retail, Birlasoft, GNFC, Hindustan Copper, India Cements, IndiaMart, LIC Housing Finance, Manappuram Finance, PNB and RBL Bank are the 11 stocks in the futures & options (F&O) ban period on Friday.
New listings
Ola Electric to debut today. Grey Market Premium data suggests a likely tepid start to this electric vehicle firm’s stock on the bourses.
That apart, Picture Post Studios to list on the NSE SME platform, and Afcom Holdings on the BSE SME. The former quoted at around 25 per cent premium; while in case of the latter off-mark deals indicated a likely listing gain of up over 70 per cent.
Primary market update
Aesthetik Engineers IPO was subscribed 23.8 times on Day 1 of the offer period on the NSE SME platform.