Market outlook July 09: Positive start likely; Nifty key levels to watch

All you need to know before market open for trade on Tuesday: Key levels to watch on the Nifty and Bank Nifty as Asian shares trade firm; Emcure Pharma to list today; 8 stocks in F&O ban.

Pre-market update Tuesday, July 09, 2024: Benchmark equity indices – the BSE Sensex and the Nifty – are likely to start today’s trading session on a mildly positive note amid firm cues from Asian peers. 

At 07:00 AM, GIFT Nifty futures quoted around 24,388 levels, indicating an uptick of 30-odd points on the Nifty 50 index at the opening bell.

On Tuesday, shares of auto companies – Maruti Suzuki in particular will be in focus after the UP government in its bid towards promoting green energy waived registration fee in the state. 

That apart, shares of Delta Corp, GM Breweries, Nitin Fire and RS Software will also be on investors radar as these companies announce their June quarter earnings today.

 

New listings 

Emcure Pharma to debut on the bourses on Tuesday. Grey market premium trend indicates a likely 36 per cent listing gain for Emcure Pharma - a mainline IPO.

Global mood

The US market ended on a mixed note on Monday a day ahead of US Fed chief Jerome Powell’s testimony. The S&P 500 and NASDAQ gained 0.1 per cent and 0.3 per cent to settle at record high levels Dow Jones, however, slipped 0.1 per cent.

The US 10-year bond yield eased to 4.278 per cent. Among commodities, Gold futures dropped to $2,370 per ounce, while Brent Crude Oil futures declined to $85.65 per barrel.

Equity markets, in the Asia-Pacific region, traded with a positive bias this morning. The Australian stock indexes surged around 0.5 per cent each. Japan’s Nikkei jumped nearly 0.9 per cent. Kospi and Taiwan were up 0.1 per cent and 0.3 per cent, respectively. 

FII, DII trading activity

Foreign institutional investors (FIIs) were net buyers in the cash segment for the fourth day in a row yesterday. They net purchased stocks worth Rs 61 crore on July 08. On the other hand, domestic institutional investors (DIIs) net sold shares to the tune of Rs 2,867 crore on Monday.

In the derivatives segment, FIIs net sold 7,323 contracts in index futures worth Rs 473.46 crore yesterday. FIIs net sold 4,554 contracts in Nifty futures, 1,520 contracts in Bank Nifty and 1,261 contracts in MidCap Nifty futures.

FIIs index long-short ratio remained above 5:1 for the fourth trading day in a row; meaning foreign investors held more than 5 long index positions for every short bet in index futures. The FIIs net index longs stood at 83.63 per cent, while shorts at 16.37 per cent.

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

Trading strategy for Tuesday, July 09 - Should you be a buyer or seller in the Nifty, Bank Nifty today? Here’s what market experts have to say:

Ashwin Ramani, Derivatives & Technical Analyst, SAMCO Securities

The Nifty traded sideways on Monday. Both the call & put writers (Bears & Bulls respectively) battled out at the 24,300 Strike in Nifty, leading to a range bound movement. 

The Nifty has formed a dragon fly like doji candle on the daily chart today. The one who gives up first at the 24,300 Strike in Nifty will set the tone for the upcoming move in the Index.

Meanwhile, the Bank Nifty has formed consecutive doji candles on the daily chart, signaling indecision. The call writers (1.89 lakh contracts) lead the put writers (1.38 lakh contracts) at the 52,500 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 has formed a dragonfly doji, while daily and hourly time frames continued to make higher highs and lows. The immediate support for the Nifty is seen at the 10 DMA and the 23.6 per cent Fibonacci retracement level, both positioned at 24,150.

Surpassing the all-time high 24,401 could push the index towards the 24,520-24,550 range. However, India VIX, which settled at 13.60 and jumped 7.09% during the day, might slow down the bullish momentum if it rises above 15 levels.

The Bank Nifty has remained range-bound between 51,996 and 53,357 in the last few sessions. A breakout on either side of this zone would confirm the trend and drive the index towards that direction. The daily RSI holds around the 60 level, indicating the potential strength. Additionally, the 20 DMA at 51,600 serves as another crucial support level.

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

Technically, on a daily basis, the Nifty has created a doji candlestick pattern, which suggests uncertainty. As long as the index holds last week's low of 23,990, a buy-on-dips strategy should be adopted. On the upside, the index may attempt to test the levels of 24,500-24,600 in the short term.

The Bank Nifty is consolidating in the band of 52,000-53,200. A breakout on either side will set the further direction for the index.

Rajesh Bhosale, Equity Technical Analyst, Angel One

Technically, not much has changed as Nifty stayed within the previous session's range, ending flat. While the primary trend remains positive, the overbought conditions across various parameters suggest caution in taking aggressive long positions on the index.

We reiterate that a correction is likely in the near term, either price-wise or time-wise, and today it seemed Nifty favored the latter. The immediate trading range is visible between 24,200 and 24,500, with key levels extending to 24,000 – 24,600.

Any dip toward the lower end would be a buying opportunity, whereas any upside toward the mentioned resistance should prompt traders to book profits.

Rupak De, Senior Technical Analyst, LKP Securities

The Nifty remained range-bound on Monday as market participants appeared to be in no hurry to decide the market's direction. Support remains at 24,240, and a fall below this level might weaken the strength of the bulls. Until then, dips might be bought into. On the higher end, resistance is seen at 24,375-24,400. Above 24,400, the index might move towards 24,600.

The Bank Nifty has formed a small-bodied candlestick on the daily chart. The trend however, remains positive as it closed above the critical moving average. Strong support level is at 52,000 where Put writers are present heavily. While, Call writers are seeing heavy position at 52500. A close above 52,500 might induce a sustained rally towards 53000.

Stocks in F&O ban period

A total of eight stocks are in futures & options (F&O) ban period on Tuesday – Aditya Birla Fashion Retail, Bandhan Bank, Chambal Fertiliser, GNFC, Hindustan Copper, India Cements, Indus Tower and Piramal Enterprises. 

Primary market update

Ganesh Green Bharat, and Effwa Infra & Research IPOs – both in the SME segment – to close for subscription today. The former has seen up to 33.5 times subscription thus far; while the latter has garnered up to 50.2 times subscription at the end of Day 2 of the offer period.