Sensex, Nifty Outlook July 12: Gap-up open likely post TCS Q1; Asia down

All you need to know before the market opens on Friday: GIFT Nifty hints at likely 100-point opening gain; TCS Q1 beat analyst expectation, Infy ADR jumped 3% in the US; Japan's Nikkei down over 2%.

Stock market preview Friday, July 12, 2024: The BSE Sensex and the Nifty are likely to start Friday’s trading session on a positive note led by gains in IT shares after TCS beat analyst expectations in Q1 results.

At 07:00 AM, GIFT Nifty futures quoted around 24,469 levels, hinting at a likely 100-point opening gap. In the US, Infy ADR surged 2.7 per cent, and Wipro gained 1.6 per cent. TCS is not listed in the US.

TCS Q1 numbers

TCS, on Thursday after market hours, reported an 8.7 per cent YoY growth in net profit at Rs 12,040 crore; sequentially profit was down 3.1 per cent. Revenue for the quarter was up 5.4 per cent YoY at Rs 62,613 crore; and up per cent sequentially.

 

TCS Q1 performance beat Bloomberg estimates on revenue and net profit. Bloomberg had estimated revenue to be at Rs 62,128 crore and profit at Rs 11,959 crore.

Other cues for the day

Back home, global cues may play spoilsport in the latter half of the trading day. That apart the focus will be on macro-economic data – with IIP and CPI inflation scheduled to be released on Friday.

India’s IIP growth, as per analysts at trading economics, is expected to dip to 4.8 per cent in May as against 5 per cent reported for April. The CPI inflation for June is expected to ease to 4.7 per cent.

Meanwhile, speaking to CNBC on Thursday, a day ahead of the inflation numbers, RBI governor Shaktikanta Das With the inflation rate hovering around 5 per cent, it is premature to have any discussion on rate cuts, Reserve Bank of India (RBI) Governor Shaktikanta Das said on Thursday.

Das said he would prefer not to provide any guidance that might mislead market players, stakeholders, and others.

Global mood

The US market ended on a mixed despite softer-than-expected CPI inflation data as profit-taking in technology stocks weighed on the NASDAQ. Headline CPI grew at a slower-pace-than expected pace at 3 per cent year-on-year in June; thus raising bets to up to 85 per cent chance of a Fed rate cut in September.

However, profit-taking tech shares hit Wall Street. NASDAQ plunged 2 per cent, and the S&P 500 shed 0.9 per cent. Dow Jones, however, ended 0.1 per cent higher.

The US 10-year bond yield eased to 4.20 per cent – its lowest level since April 03. Among commodities, Gold futures rallied past the $2,400-mark, while Brent Crude Oil futures hovered around the $85 per barrel levels.

Equity markets, in the Asia-Pacific region, also displayed a mixed trend. Japan’s Nikkei has tumbled over 2 per cent, and Kospi 1.3 per cent. The Australian stock indexes, however, was up 0.6 per cent each.

FII, DII trading activity

Foreign institutional investors (FIIs) turned to be net sellers in the cash market on July 11. They net sold shares to the tune of Rs 1,137.01 crore. Domestic institutional investors (DIIs), on the other hand, were net buyers of stocks worth Rs 1,676.47 crore yesterday.

In the derivatives segment, FIIs were net sellers for the second straight day; they net sold 31,714 contracts amounting to Rs 2,179.30 crore on Thursday. FIIs net sold 15,762 contracts in Nifty futures, and 14,083 contracts of Bank Nifty futures.

Pursuant to which, FIIs index long-short ratio dropped to 3.6:1; its lowest level in the last 11 trading sessions. The ratio means that FIIs still hold near-about 4 long positions in index futures for every bet on the short side. The FIIs longs in index futures stood at 78.12 per cent, while shorts at 21.88 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 12 - Should you be a buyer or seller in the Nifty, Bank Nifty today? Here’s what market experts recommend:

Chandan Taparia, Senior VP, Equity Derivatives & Technicals, Broking & Distribution, MOFSL

The Nifty has remained in a narrow band of 300 points in between 24,150 to 24,450 zones, during the last four sessions. It has stuck in a range but declines are being bought. 

The Nifty has been forming bearish candle on daily scale but with long lower shadow which indicates declines are being bought and market is absorbing supply of new high zones. Now it has to continue to hold above 24,150 zones to extend the move towards 24,750; whereas supports are placed at 24,150 then 24,000 zones.

The Nifty Option data suggests a broader trading range in between 24,000 to 24,600 zones while an immediate range between 24,200 to 24,400 levels.

Ashwin Ramani, Derivatives & Technical Analyst, SAMCO Securities

The Nifty has formed a consecutive hanging man pattern on the daily chart. The 24,200 & 24,300 Strike saw significant put writing over call writing. The one who gives up on the 24,300 Strike first will set the tone for the future movement in Nifty.

The Bank Nifty formed a dragonfly doji pattern on the daily chart. The Index reversed from its previous channel support of 51,800 level. The 51,800 Strike saw heavy put writing. The option activity at the 52,000 Strike will provide cues about Bank Nifty’s future direction.

Om Mehra, Technical Analyst, SAMCO Securities

On the daily time frame, the Nifty formed a consecutive Hanging Man pattern, indicating indecisiveness to bearish setup in the short term. A breach of the immediate support level at 24,140 would signal further weakness while surpassing the 24,400 mark would suggest a resumption of the uptrend.

The Bank Nifty has formed a long-legged Doji, indicating indecision in the short term. The index has slipped below its 10-day moving average (DMA) and the hourly chart displays lower lows and lower highs, suggesting a bearish trend.

The immediate support level for the Bank Nifty stands at 52,000, which aligns with the 20 DMA. Weakness is expected to persist if the index slips below 51,900. Conversely, breaking through the resistance at 52,530 could drive the index toward the 53,000-53,200 zone.

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

Technically, the Nifty witnessed profit booking after forming a bearish engulfing pattern on a daily scale. Thus, the index will find resistance near 24,460. Once the index sustains above this level, a rally could extend towards 24,550 to 24,600 levels. On the downside, 24,170 and 24,000 will act as good support levels for the index.

The Bank Nifty formed a doji candle near the demand zone of 52,000. If Bank Nifty sustains above Thursday’s high of 52,400, the rally could extend to 53,000.

Rajesh Bhosale, Equity Technical Analyst, Angel One

On the Nifty daily chart, prices formed an inside bar candle, trading within the previous session's range. Bulls have continuously defended their territory against any weakness but have struggled to trigger upward momentum.

Observing the chart closely reveals a defined range between the 24,150 and 24,450 zones. The next directional move is likely to come once this range is broken, and traders are awaiting a trigger for this momentum move.

On the downside, prices have safely defended the 24200-24150 range in the last two sessions, which can be considered crucial support. A break below this may trigger a price correction, which could be healthy for the market ahead of the key budget. Traders are advised to monitor these key levels closely.

Rupak De, Senior Technical Analyst, LKP Securities

In the near term, the Nifty might trade sideways, with 24,150 and 24,400 acting as the key levels. A decisive fall below 24,150 might trigger panic in the market, while a decisive move above 24,400 might induce a rally towards 24,650.

The Bank Nifty is trading near a crucial support zone of 52,000-51,800. If it manages to hold this level, it could witness a pullback rally towards 52,500. A sustained move above 52,500 will open up the gates for 53,000. However, if it fails to hold the support at 51,800, it could decline further towards the 51,300-51,000 zone.

Stocks in F&O ban period

A total of 10 stocks are in futures & options (F&O) ban period on Friday - Aditya Birla Fashion Retail, Balrampur Chini, Bandhan Bank, Chambal Fertiliser, GNFC, Indian Energy Exchange, India Cements, Indus Tower, Piramal Enterprises and RBL Bank. 

New listings 

Ganesh Green Bharat, and Effwa Infra & Research to list on the NSE SME platform today. Both the IPOs commanded huge demand in the grey market and hence are expected to list at the NSE cap of 90 per cent over their respective issue price.

Primary market update

Four SME IPOs, two each on the BSE and NSE to open for subscription on Friday. On the NSE - Prizor Viztech and Sati Poly Plast look to raise up to Rs 25.15 crore and Rs 17.36 crore. Equity shares of the former IPO are available for subscription in the price band of Rs 82  - Rs 87; while the latter offers shares in Rs 123 – Rs 130 range.

Meanwhile, Aelea Commodities (Rs 91 – Rs 95 price band) and Three M Paper Boards (Rs 67 – Rs 69 range) aim to raise up to Rs 51 crore and Rs 39.83 crore on the BSE SME platform.

Sahaj Solar IPO, which opened yesterday on the NSE, was subscribed 37.6 times on Day 1 of the three day offer period.