Budget 2024 day market outlook: Nifty may open tad higher; key levels here

All you need to know before the market opens on Budget Day, July 23: The Budget 2024-25 is likely to set the market direction in the near-term; Experts recommend keeping a close tab on Nifty 24,500.

Stock market preview, Tuesday, July 23, 2024: Indian stocks seem poised to start trade on the Union Budget Day on a cautiously optimistic note, backed by supportive signals from global peers.

Finance minister Nirmala Sitharam today will present her seventh straight Budget, and the first under Modi 3.0 following the Lok Sabha polls victory. The Union Budget 2024-25 is likely to set the market tone in the near-term.

At 07:00 AM, GIFT Nifty futures quoted around 24,550, hinting at a mildly positive start for the Nifty 50 index.

Meanwhile, in the Economic Survey presented in the Parliament yesterday – the government has projected GDP growth at 6.5 – 7 per cent for FY25.

 

Watch Video: Decoding the Economic Survey 2024

Among individual stocks, Bajaj Finance, Hindustan Unilever, ICICI Prudential Life Insurance Company, Mahindra & Mahindra Financial Services, Torrent Pharma and United Spirits are likely to be in focus ahead of Q1 results.

Global mood

The US market rallied on Monday as stocks reacted to Joe Biden’s decision to step-down from the US Presidential race. Dow Jones gained 0.3 per cent. The S&P 500 jumped 1.1 per cent, and NASDAQ soared 1.6 per cent boosted by Nvidia stock.

The US 10-year bond yield quoted around 4.24 per cent. Among commodities, Gold futures were seen hovering around the $2,400-mark. Brent Crude Oil futures floated around $83 per barrel.

This morning in Asia – Japan’s Nikkei was up 0.2 per cent. Taiwan zoomed 1.9 per cent. Singapore’s Straits Times and Malaysia’s Kospi benchmarks gained over 0.5 per cent each.

FII, DII trading activity

Foreign institutional investors (FIIs) net bought shares to the tune of Rs 3,444.06 crore in the cash market on July 22. Domestic institutional investors (DIIs), on the other hand, were net sellers of stocks worth Rs 1,652.34 crore on Monday.

In the derivatives segment, FIIs net sold 20,096 contracts of index futures, for a consideration of Rs 1,274.11 crore on Monday. FIIs net sold 20,804 contracts of Nifty futures, and 2,824 contracts of Bank Nifty futures.

Pursuant to which, FIIs index futures long-short ratio dropped to 3.4:1. This ratio signifies that FIIs hold near about 3.5 long positions in index futures for every bet on the short side. The FIIs longs in index futures dropped to 77.44 per cent, while shorts rose to 22.56 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 Tuesday, July 23 - Should you be a buyer or seller in the Nifty, Bank Nifty as FM presents the Union Budget 2024-525 today? Here’s what market experts recommend:

Dhupesh Dhameja, Technical Analyst, SAMCO Securities

Recent activity in the options market reveals a bearish sentiment, with investors focusing more on writing call options than put options. This shift breaks a one-week streak of bullish sentiment.

Key levels of interest include significant open interest at the 25,000 call and 24,000 put options. There is also notable trading interest in the 24,500 puts and 24,800 calls. The Nifty Put-Call Ratio (PCR) has declined from 1.02 on Friday to 0.87, indicating a decreasing preference for puts over calls.

Based on current data and market sentiment, a bearish outlook will prevail only if the Nifty sustains below 24,500 levels. Profit booking could lead to buyers exiting their positions, confirming the breakdown of the upward-sloping channel. The 24,500 level will serve as immediate support, with 24,620 acting as crucial resistance. If the index falls below 24,500, the next target on the downside will be 24,370.

The Bank Nifty index continues to struggle for direction, remaining trapped in a narrow range and extending its lacklustre performance from previous sessions. 

In the options market, key levels of interest include significant open interest at the 52,500 calls and 52,000 put options. There is also notable trading interest in the 52,500 and 52,300 calls, as well as the 52,000 puts. The Index Put-Call Ratio (PCR) has decreased to 0.58 from 0.62 on Friday, indicating a rising preference for calls and reflecting a sentiment favouring further sideways to downside movement.

Given the current data and prevailing market sentiment, the outlook remains sideways. The index is trading within a range of 52,790 to 52,170. As long as the index stays within this range, range trading strategies are advisable. A decisive breakout on either side of the 52,100-52,800 range will provide cues about the future direction of the Bank Nifty.

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

Technically, the Nifty on a daily scale had formed a bearish engulfing candle on Friday and remained under pressure on Monday. Thus, as long as the index remains below 24,855, a sell-on-rise strategy needs to be adopted in Nifty.

The Bank Nifty has formed a bullish candle near short-term swing support and managed to close above the 21-DEMA support of 52,064. Thus, Bank Nifty will find strong support near 51,800-52,000 levels. On the upside, 52,800 and 53,000 will serve as strong resistance levels.

Rajesh Bhosale, Equity Technical Analyst, Angel One

Technically, the price structure appears weak, with the formation of Bearish Engulfing and Shooting Star patterns last week. Additionally, the bearish crossover of RSI Smoothened in the overbought zone does not bode well for the bulls. Therefore, we remain cautious on Budget Day and would refrain from aggressive long bets. This rationale holds as long as Friday’s high of 24,850 remains intact.

On Budget day, the Nifty is likely to experience wild swings, with 24850 as a stiff hurdle followed by 25,000. On the downside, 24,200 followed by 24,000 serve as key support levels. Any significant close below these levels may trigger a much-awaited price correction in the near term.

Rupak De, Senior Technical Analyst, LKP Securities

On the Nifty, a small-bodied candle has formed on the daily chart following a bearish engulfing pattern, suggesting a pause before the next movement. The Relative Strength Index (14) has entered a bearish crossover and is exiting the overbought zone.

The 24,550 level is likely to act as an immediate hurdle for Nifty. A move above 24,550 might induce a meaningful rally in the Nifty, while support is placed at 24,480. A decisive fall below 24,480 might induce selling pressure in the market.

On the Bank Nifty, Call writers were active at higher strike prices, indicating limited upside potential. Despite this, Bank Nifty managed to close above its 21-day EMA, suggesting resilience in the underlying trend. The view for Bank Nifty remains sideways or range-bound until it breaks key levels, with support at 52,000 and resistance at 52,800.

Stocks in F&O ban period

A total of 7 stocks are in futures & options (F&O) ban period on Tuesday – Bandhan Bank, Chambal Fertilisers, GNFC, Hindustan Aeronautics, India Cements, Piramal Enterprises and SAIL. 

New listings 

Tunwal E-motors to debut on Tuesday; grey market premikum indicates a likey tepid start to the stock.

Primary market update

SAR Televenture IPO and RNFI Services IPO were subscribed up to 0.7 times and 5.3 times at the end of Day 1 of the offer period on the NSE yesterday. VL Infraprojects IPO opens today.

Meanwhile, Sanstar IPO, which closes today; was subscribed up to 13.5 times at the end of Day 2.

Additionally, VVIP Infratech IPO to open for subscription in the price band of Rs 91 – Rs 93 on the BSE.