Market outlook July 19: Nifty eyes 25,000, but global mood down; key levels

All you need to know before market opens on Friday: Analysts believe the trend to remain bullish as long as Nifty holds 24,500; Infy in focus post better-than-expected Q1 results. Sahaj Solar to debut

Stock market preview, Friday, July 19, 2024: Following yesterday’s bullish momentum, the market participants are now hopeful that the Nifty may scale the 25,000-mark milestone ahead of the Union Budget 2024, which is due on Tuesday.

At 07:00 AM, GIFT Nifty futures quoted around 24,828; hinting at a likely quiet start to the trading action on the Nifty 50 index.

Better-than-expected Q1 numbers by Infosys coupled with upward revision in revenue guidance for FY25 is likely to add cheer to IT shares. The IT major reported 7.1 per cent YoY growth in net at Rs 6,368 crore beating Bloomberg estimates of around Rs 6,248 crore. Infosys raised its FY25 revenue guidance upwards to 3 - 4 per cent from 1 - 3 per cent earlier.

 

Further, the positive sentiment is aided by recent buying activity by the foreign investors, both, in the cash and derivatives segment.

The only concern for the market today seems to be profit-taking seen in global shares. 

On the earnings front - BPCL, JSW Steel, Reliance Industries, UltraTech Cement, Paytm and Wpro are among the prominent companies scheduled to announce Q1 results today.

Global mood

Overnight in the US, benchmark indices as the sell-off in technology stocks spread to other counters.Dow Jones plunged 1.3 per cent. The S&P 500 and NASDAQ dropped around 0.8 per cent each.

The US 10-year bond yield quoted around 4.194 per cent. Among commodities, Gold futures dropped back to $2,425 levels. Brent Crude Oil futures continued to languish near the $85 per barrel mark.

Equity markets in Asia too seemed like a worried lot. Kospi and Taiwan were down more than 1 per cent each; Straits Times also declined over 0.5 per cent. Japan’s Nikkei, however, was flat.

FII, DII trading activity

Foreign institutional investors (FIIs) were net buyers of stocks worth Rs 5,483.63 crore in the cash market on July 18. Domestic institutional investors (DIIs), on the other hand, net sold shares to the tune of Rs 2,904.25 crore on Thursday.

In the derivatives segment, FIIs net bought 42,744 contracts of index futures, for a consideration of Rs 2,594.82 crore yesterday. FIIs net bought 46,719 contracts of Nifty futures, while sold 3,459 contracts of Bank Nifty futures.

Pursuant to which, FIIs index futures long-short ratio remains above 4:1. This ratio signifies that FIIs hold more than 4 long positions in index futures for every bet on the short side. The FIIs longs in index futures rose to 80.67 per cent, while shorts stood at 19.33 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 Friday, July 19 - Should you be a buyer or seller in the Nifty, Bank Nifty today? Here’s what market experts recommend:

Ashwin Ramani, Derivatives & Technical Analyst, SAMCO Securities

The Nifty hit a new all-time high of 24,838 on July 18. Strong put writing was observed at the 24,700 & 24,800 Strikes in. The Nifty has given a strong closing on the daily chart after enduring two sideways trading sessions. The maximum call open interest is at the 25,000 Strike and the option activity at this strike will provide cues about Nifty’s future direction.

The Bank Nifty has been moving in the 52,200-52,800 range since last four trading sessions. The call writers (Bears) have significant positions built up at the 53,000 Strike and the option activity at this strike will provide cues about Bank Nifty’s upcoming direction.

Om Mehra, Technical Analyst, SAMCO Securities

On the daily timeframe, the Nifty formed a bullish engulfing candle as the index rebounded from near the 24,500 level, where the 9-day EMA acts as strong support. The index continues to inch higher, forming higher highs and higher lows, indicating a sustained bullish trend. Currently, a trend-following strategy would be suitable with any minor pullback of a buying opportunity.

The Bank Nifty formed a bullish candle with a large body with smaller wick. It remains above the 10-day and 20-day EMAs, with immediate support at 52,200. A break above 52,800 could lead to new highs in the coming sessions.

Osho Krishan, Senior Analyst - Technical & Derivatives, Angel One

The bullish candlestick formation at the record high signifies the buoyant undertone for the Nifty. However, there have been some divergences in the advance-decline ratio and the actual market movement that raise concerns at current levels.

Technically, the Nifty is firmly withholding its ground even at overly stretched parameters, mainly driven by a strong sectoral performance.

As far as levels are concerned, the 24,500 is now expected to provide strong support, before which some cushioning to upcoming blips could be seen around the 24,650 subzones. On the higher end, it's challenging to anticipate the exact resistance zone, but achieving the milestone of 25,000 is now seen as a significant target for the bulls, especially in the context of the pre-budget rally.

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

Technically, the Nifty has crossed the high of the ‘Doji’ candle, hitting the first objective of 24,800. If the momentum persists, the rally can extend towards the 25,000-25,200 levels. On downside, 24,500 will act as good support for short term.

The Bank Nifty managed to defend the 21-DEMA support of 52,020 levels. As long as the index holds above 52,000 levels, the ongoing bullish momentum will continue for Bank Nifty. On the upside, 52,800 and 53,000 will serve as strong resistance levels.

Rupak De, Senior Technical Analyst, LKP Securities

In the short term, the trend is likely to remain positive as long as the Nifty stays above 24,500. On the higher end, the current trend might take the index towards 25,000 in the near term.

The Bank Nifty formed a bullish engulfing pattern following a consolidation. Additionally, the index found support at the 21 EMA, and the RSI has entered a bullish crossover. The trend is likely to remain positive as long as the index stays above 52,000. On the higher end, it might move towards 53,000/53,300 in the short term.

Stocks in F&O ban period

A total of 11 stocks are in futures & options (F&O) ban period on Friday – Balrampur Chini, Bandhan Bank, GMR Infra, GNFC, Hindustan Aeronautics, Hindustan Copper, India Cements, Piramal Enterprises, RBL Bank, SAIL and Vedanta. 

New listings 

Sahaj Solar to list on the NSE SME platform on Friday; grey market premium indicates a robust listing for the stock followed by additional gains. 

Primary market update

Sanstar Rs 510 crore IPO to open for subscription today in the price band of Rs 90 – Rs 95 per share.

Kataria Industries and Macobs Technologies IPOs were subscribed up to 30.4 times and 9.7 times at the end of Day 2 of the offer period.