Nikkei up 11%, GIFT Nifty at 24,300, 6 new listings; Trade setup for Aug 6

All you need to know before market opens Tuesday: After tumbling up to 3.4%, the US stock futures were up to 2% in post market trades; Asian shares cheered the pullback. FirstCry IPO opens today.

Trading guide for Tuesday August 6, 2024: Equity benchmark indices are likely to witness a relief rally in opening trades on Tuesday in sync with a sharp recovery seen in Asian peers.

At 07:00 AM, GIFT Nifty futures quoted around 24,300 levels – hinting at an over 200 points opening gap on the Nifty 50 index.

On Monday, the Nifty 50 index had tumbled below the 24,000-mark and the Sensex gave-up the 79,000-level amid heavy sell-off in the global markets as investors panicked on likely impact of Japanese Yen carry trade unwinding.

“The recent hike in Japanese interest rates and appreciation in the yen has led to a double whammy for Yen carry traders who have to pay back in Yen and suffer losses on their investments too”, said Apurva Sheth, Head of Market Perspectives and Research, SAMCO Securities in a note.

 

“The bulls would love to brush it off and get ready to buy the dip like they have done each time since Covid. However, when you look at the combined VIX it tells you that this time is different and you must not rush to buy it. Wait for the prices to settle. You might get a better buying opportunity in few weeks.” cautioned Apurva Sheth

On Tuesday, stocks of Bharti Airtel and ONGC are likely to be in limelight as they react to Q1 numbers announced post market hours yesterday. Airtel reported over 158 per cent growth in profit, while ONGC’s profit declined by 32 per cent year-on-year.

Asian markets lead global pullback

This morning in Asia, Japan’s Nikkei surged nearly 11 per cent. Kospi zoomed up to 5 per cent, and Taiwan gained 2.7 per cent.

Overnight in the US, key benchmark indices extended losses amid grappling fears of an US recession. NASDAQ cracked 3.4 per cent, the S&P 500 shed 3 per cent and Dow Jones dropped 2.6 per cent.

The US stock futures, however, rallied up to 2 per cent in the post market trades as bulls rushed in to buy bargain deals.

The US 10-year bond yield rose to 3.836 per cent. Among commodities, Gold futures hovered around $2,450 levels; while WTI Crude Oil futures quoted around $74 per barrel.

Trading strategy for Nifty, Bank Nifty on Tuesday, August 6 2024

Rajesh Bhosale, Equity Technical Analyst, Angel One

Global equity markets were under severe strain, and we experienced one of the steepest declines, dropping below the 24,100 mark, which had been a base level for the past month. There was a broad-based sell-off, with support levels breaking easily. The only relief came from prices holding near the 50 EMA around 23,900.

However, given the strong bearish momentum, this support may be breached in the coming sessions. Traders are advised to avoid attempting to catch the bottom in the short term and should use any rebounds to reduce long positions.

In this scenario, 24,250 is seen as immediate resistance, while overcoming the bearish gap left today between 24,350 and 24,700 would be a daunting task. On the downside, 23,900 followed by 23,600 (the 38.2 per cent retracement of gains from the election day low) are immediate support levels. The key support would be around 23,400-23,300, aligning with the 89 EMA and the 50 per cent retracement of the mentioned upmove.

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

Technically, the Nifty witnessed heavy selling pressure after forming a spinning top pattern and ended with a red candle. A strong break below 24,000 will likely trigger further selling pressure in the index. On the downside, 23,300 and 23,000 will provide significant support for the Nifty in the immediate term.

The Bank Nifty has broken the short-term swing support at 50,438 and continued forming lower highs and lower lows, indicating weakness. On the upside, 50,400-50,500 will act as an immediate hurdle for the Bank Nifty, while 49,500 and 49,000 will provide short-term support for the index.

Rupak De, Senior Technical Analyst, LKP Securities

The Nifty slipped back into the rising channel on the daily time frame due to heavy selling on Monday. The RSI is in a bearish crossover and falling. Sentiment is likely to remain weak in the short term and may weaken further below 23,900. Support is placed at 23,900/23,700. On the higher end, resistance is seen at 24,200/24,500.

Where is the big money moving? Here’s an update on the latest FII, DII trading activity

On Monday, foreign institutional investors (FIIs) net sold stocks to the tune of Rs 10,073.75 crore. On the other hand, domestic institutional investors (DIIs) net bought shares worth Rs 9,155.55 crore.

In the derivatives segment, FIIs net sold 34,924 contracts of index futures for a consideration of Rs 2,433.94 crore on August 5. FIIs net sold 13,228 contracts of Nifty futures; 20,863 contracts of Bank Nifty futures and 865 contracts of MidCap Nifty futures.

Pursuant to which, FIIs long-short ratio in index futures stood declined to 1.5:1. This ratio implies that foreign investors hold 3 long positions in index futures for every 2 bets on the short side of trade. The FIIs longs in index futures stood at 60.21 per cent.

Stocks in F&O ban period

Aditya Birla Capital, Birlasoft, Chambal Fertiliser, GNFC, Granules India, Hindustan Copper, India Cements, IndiaMart and RBL Bank are the nine stocks in the futures & options (F&O) ban period on Tuesday. 

New listings 

A total of six new listings will happen today. Shares of Akums Drugs and Pharmaceuticals will debut in the mainline bourses. The stock is expected to witness a tepid listing gain as per the existing grey market premium data.

Sathlokhar Synergys E&C Global, Bulkcorp, Rajputana Industries and Ashapura Logistics will be listed on the NSE SME plaftform. These four stocks were quoting at over 50 per cent premium in the grey market, with Rajputana leading the lot.

Kizi Apparels to debut on the BSE SME platform, with a decent listing gain. 

Primary market update

Brainbees Solutions, the parent company of FirstCry, Rs 4,193.73 crore IPO will open for subscription in the price band of Rs 440 – Rs 465 per share. The issue consists fresh issue of 3.58 crore equity shares and an offer for sale of 5.44 crore shares.

Unicommerce eSolutions to raise up to Rs 277 crore by way of share sale in the price band of Rs 102 – Rs 108 per equity share.

Ola Electric Mobility IPO closes today. The issue was subscribed 106 per cent at the end of Day 2 of the offer period. The institutional portion had garnered 40 per cent subscription, high net worth individual portion more than 1 time and retail quota was subscribed nearly 3 times. 

That apart, Picturepost Studios IPO was subscribed 54.2 times.

Meanwhile, Sebi has approved the Rs 7,000 crore IPO of Bajaj Housing Finance. The housing finance firm, which is a wholly-owned subsidiary of Bajaj Finance, is eyeing to raise Rs 4,000 crore through fresh issuance while the public offer will also have an offer for sale.