Trading guide July 10: Nifty poised to open flat; Emcure, Bansal to list

All you need to know before market opens for trade on Wednesday: The Fed chief Jerome Powell in his testimony reiterated its stance to stick with data-based decision-making; global markets trade flat.

Pre-market update Wednesday, July 10, 2024: Benchmark equity indices – the BSE Sensex and the Nifty – are likely to start Wednesday’s trading session on a quiet note amid lack of directional cues from global peers. 

At 07:00 AM, GIFT Nifty futures quoted around 24,478 levels.

Global mood

The US market ended on a mixed note on Tuesday amid the US Fed chief Jerome Powell’s testimony. Powell said the labour market looked strong, and was back to pre-Covid levels, but the economy was not overheated.

On interest rate cuts, Powell made it clear that the Fed will stick with data-based decision-making.

The S&P 500 and NASDAQ gained 0.1 per cent each to settle at new highs. Dow Jones, however, was down 0.1 per cent.

The US 10-year bond yield rose a wee bit to 4.30 per cent. Among commodities, Gold futures hovered around $2,370 per ounce, while Brent Crude Oil futures dipped below $85 per barrel.

Equity markets, in the Asia-Pacific region, traded on a tepid note this morning. The Australian stock indexes were down up to 0.5 per cent each. Japan’s Nikkei, Kospi and Taiwan were flat. 

FII, DII trading activity

Foreign institutional investors (FIIs) were net buyers in the cash segment for the fifth straight day. They net purchased stocks worth Rs 314.46 crore on July 09. Domestic institutional investors (DIIs) too turned net buyers, they net bought shares to the tune of Rs 1,416.46 crore on Tuesday.

In the derivatives segment, FIIs net bought 8,932 contracts in index futures for a consideration of Rs 498.31 crore yesterday. FIIs net bought 11,721 contracts in Nifty futures, while net sold 2,725 Bank Nifty contracts.

FIIs index long-short ratio remained above 5:1 for the fifth trading day in a row; meaning foreign investors held more than 5 long positions for every bet on the short side in index futures. The FIIs net index longs stood at 83.69 per cent, while shorts at 16.31 per cent.

On the other hand, DIIs and retail investors’ index long-short ratio continued to remain around 0.5:1; meaning 2 index short bets for every long trade. 

Trading strategy for Wednesday, July 10 - Should you be a buyer or seller in the Nifty, Bank Nifty today? Here’s what market experts have to say:

Rajesh Bhosale, Equity Technical Analyst, Angel One

Although the market maintained its bullish undertone, the session lacked opportunity for intraday traders. On the daily chart, prices continue to rise with small-bodied candles.

Ideally, long-bodied candles indicate favorable trading conditions, but the current lethargic formations are testing the patience of both sides of the trend. While the overall sentiment remains positive without signs of weakness, the market appears overbought by various measures.

Therefore, we advise against aggressive long positions. Key levels to watch are 24,600 – 24,650, the golden ratio retracement of the panic fall seen during the Election Day results. On the downside, immediate support is at 24,330 followed by 24,160.

Ashwin Ramani, Derivatives & Technical Analyst, SAMCO Securities

Call writers (Bears) exited and put writers (Bulls) entered at the 24,200 & 24,300 Strike in Nifty, leading to the steady up move in the Index on Tuesday. Strong put writing was observed at the 24,400 Strike in Nifty.

The Nifty has given a higher close on the daily chart after trading sideways in the previous two trading sessions. The option activity at the 24,500 Strike will provide cues about Nifty’s upcoming direction.

The Bank Nifty has been consolidating in a range since last three trading sessions. Strong call writing was observed at the 52,600 Strike in Bank Nifty. The call writers (1.99 lakh contracts) lead the put writers (72K contracts) at the 52,600 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 is well-supported by the 10-day moving average of around 24,200. Trading within a broad rising channel, marked by higher highs and higher lows, which displays a strong primary trend. The index swiftly recovered despite a 23.6 per cent retracement and moved higher. The Nifty is expected to test the range of 24,580–24,640 in the upcoming session.

The Bank Nifty is currently consolidating within a broad range, with support at 52,100 and resistance near 53,370. A breakout from this range will most likely determine the next directional move. Meanwhile, a buy-on-dips strategy could be implemented in the coming sessions.

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

Technically, the Nifty is forming higher top higher bottom formation, indicating strong uptrend. The short-term swing support is placed near 24,168. As long as index holds above 24,168, Nifty could test levels of 24,500 - 24,600. Therefore, a "buy on dips" strategy should be adopted in the short term.

On a daily scale, the Bank Nifty has formed a bullish engulfing candle near the lower end of short-term consolidation. Thus, 52,000 - 52,200 will act as strong support for the Bank Nifty in the short term. As long as the Bank Nifty holds above 52,000 levels, it could test 53,000 - 53,200 levels.

Rupak De, Senior Technical Analyst, LKP Securities

The sentiment is likely to remain positive as long as the Nifty stays above 24,300, where significant put writing has occurred. On the higher end, the 24,500 - 24,600 range might act as an immediate resistance zone. Overall, the sentiment may continue to favor the bulls in the near term unless the index falls below 24,300.

Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities

The Bank Nifty index remains in a buy-on-dip mode, and a break above 52,700 will open up further upside towards 53,000, where the highest open interest is built up on the call side. However, if the index fails to hold the support of 52,100 - 52,000, it can decline further towards the 51,700 – 51,500 mark.

New listings 

Emcure Pharma and Bansal Wire to debut on the bourses on Wednesday. Grey market premium trend indicates a likely 30 per cent listing gain for Emcure Pharma; while, Bansal Wire may debut with a 27 per cent premium.

Stocks in F&O ban period

A total of nine stocks are in futures & options (F&O) ban period on Wednesday – Aditya Birla Fashion Retail, Balrampur Chini, Bandhan Bank, Chambal Fertiliser, GNFC, Indian Energy Exchange, India Cements, Indus Tower and Piramal Enterprises.