 "Will the stock market rise or fall on Tuesday? Here's all you need to know")
Pre-stock market update for Tuesday, June 11, 2024: Equity benchmark indices may look to consolidate on Tuesday following the recent sharp gains ahead of this week’s US Federal Reserve rate decision meeting. The focus will be on the likely projections for the number for rate cuts in 2024.
According to reports, Economists at Citi expect three rate cuts of 25 bps each in September, November and December. However, a section of the market fears that given the stubbornly high inflation, the Fed may hint at two rate cuts in 2024 as against three hinted at in the month of March.
The optimism about a rate cut is waning as the US economic data points remain healthy. The FED is expected to continue its current stance. However, any dial-back of the rate cut guided earlier could test market patience, said Vinod Nair, Head of Research, Geojit Financial Services in a note.
That apart, equities are likely to witness sector specific moves, with defence and infra related shares in focus after the Modi government conveyed a message of continuity in governance by retaining portfolios of key Union Cabinet ministers they had handled in the previous government.
The Cabinet Committee on Security (CCS) members remained unchanged. Union ministers Rajnath Singh, Amit Shah, Nirmala Sitharaman, and S Jaishankar retained their portfolios of Defence, Home Affairs and Cooperation, Finance and Corporate Affairs, and External Affairs, respectively. Nitin Gadkari will continue to handle the Road Transport and Highways portfolio. READ MORE
Meanwhile, India’s IIP and inflation numbers will also be announced on Wednesday.
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At 07:00 AM, Gift Nifty futures quoted around 22,260 levels and hinted at a likely subdued start to the trading action on the Nifty 50 index.
Fund flow action
Foreign institutional investors (FIIs) were net buyers for the second straight day on Monday, they net bought stocks worth Rs 2,572 crore. At the same time, domestic institutional investors (DIIs) were net buyers of shares to the tune of Rs 2,764 crore.
In the derivatives segment, FIIs index long-short ratio improved to 0.52, with net index shorts at 65.75 per cent as against a high of 87.25 per cent at the end of the trading sessions on June 04.
Global mood
On Monday, the US market ended with marginal gains, with the S&P 500 and Nasdaq hitting new peaks ahead of the Fed meeting outcome. The two benchmarks added 0.3 per cent, while Dow gained 0.2 per cent.
The US 10-year yield quoted around 4.45 per cent. Among commodities, Gold futures rose to $2,315 levels, while Brent Crude Oil jumped to near about $82 per barrel.
Markets, in the Asia-Pacific region, exhibited a mixed note. The Australian equity benchmarks – the S&P ASX 200 and All Ordinaries were down over 1 per cent each, while Japan’s Nikkei rose 0.5 per cent, and Kospi advanced 0.3 per cent.
Trading strategy for Tuesday, June 11 - Should you be a buyer or seller today? Here’s what market experts recommend:
Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates
Technically, the Nifty registered a record high of 23,411.90 and found trend line resistance, leading to profit booking. Thus, as long as the index remains below 23,412, profit booking can't be ruled out. If the index sustains above 23,412, then the rally could extend to 23,700-23,800 levels.
On the downside, immediate support for the Nifty is placed near 23,000, followed by 22,600, where the 34-Day Exponential Moving Average (DEMA) support is placed.
Technically, on the weekly scale, the Bank Nifty has formed a hanging man candlestick pattern. As per this pattern, 51,130 - 51,140 will act as resistance for the index. On the downside, immediate support for the index is placed near 49,000 levels followed by 48,580 levels, where 34-DEMA support is placed.
Ashwin Ramani, Derivatives & Technical Analyst, SAMCO Securities
The Nifty has formed a shooting star like pattern on the daily chart. All Strikes from 22,800 until 23,000 saw call writers exiting and put writing, which kept the Index steady throughout the day. Strong put writing was observed at the 23,200 Strike in Nifty. The call writers (Bears) have sizeable positions at the 23,300 Strike and the option activity at this strike will provide cues about Nifty’s upcoming direction.
On the Bank Nifty, all Strikes from 49,000 until 49,500 saw call writers (Bears) exiting and put writing, which kept the index steady throughout the day. Strong call writing was observed at the 50,000 Strike. The put writers (Bulls) have sizeable positions at the 49,500 Strike and the option activity at this strike will provide cues about Bank Nifty’s Intraday direction.
Om Mehra, Technical Analyst, SAMCO Securities
On Monday, a reversal occurred near the upper Bollinger Band, positioned around the 23,400 level, signaling a potential resistance point. The Nifty formed a spinning top pattern, reflecting market indecision and suggesting a potential pause in the prevailing trend. However, the hourly chart maintains a bullish outlook. The 23,100-23,000 range serves as a strong support zone, presenting a buying opportunity for any pullbacks.
The Bank Nifty, on the daily chart, formed a Gravestone Doji . There might be a potential weakness if the index slips below 49,650, which could test the 49,300-49,150 levels. However, the primary trend remains strong. The daily RSI is at 56, indicating a balanced momentum. The index needs to sustain above the 50,000 mark for the uptrend to resume.
Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities
The Nifty encountered resistance at higher levels and was unable to close above the 23300 mark. immediate support for the index stands in the 23,000 – 22,900 zone, with a break below this range likely to trigger aggressive selling pressure. In the near term, the index is expected to consolidate within a broad range of 23,000 – 23,500.