Sensex, Nifty outlook July 16: Q1 nos, trading holiday may sway market mood

All you need to know before market opens on Tuesday: The Sensex, Nifty likely to open higher tracking cues from GIFT Nifty; FIIs increased bets on index longs. 7 SME IPOs open for subscription today.

Stock market preview, Tuesday, July 16, 2024: The BSE Sensex and the Nifty are likely to start today’s trading session on a positive note given the prevailing bullish mood in the market and early earnings cheer.

However, some volatility can be expected in the trading day ahead owing to the Bank Nifty’s weekly option expiry and a trading holiday tomorrow on account of ‘Muharram’.

At 07:00 AM, GIFT Nifty futures quoted around 24,637 levels as against the spot Nifty close of 24,587 yesterday.

Stocks to Watch 

Bajaj Auto, CRISIL, Just Dial to announce Q1 results on Tuesday. Asian Paints and LTIMindtree on Wednesday.

 

That apart, shares of domestic oil & gas explorers will be in focus following a hike in windfall tax to Rs 7,000 per metric tonne (MT) from Rs 6,000 per MT earlier.

Global mood

Overnight, the US market gained up to 0.5 per cent with benchmarks hitting fresh record highs as expectations of a rate cut in September and Donald Trump’s victory in the forthcoming elections increased.

The US Federal Reserve chief Powell last night said that recent inflation readings had boosted its confidence in lower inflation, ramping up bets that the central bank was close to cutting interest rates.

Meanwhile, Trump was officially nominated as the Republican frontrunner for the 2024 presidential race, and named Ohio Senator J D Vance as his vice presidential running mate. Trump’s chances of a victory were seen increasing sharply after the assassination bid over the weekend.

On Monday, Dow Jones ended 0.5 per cent higher at 40,212. NASDAQ climbed 0.5 per cent, and the S&P 500 added 0.3 per cent.

The US 10-year bond yield eased to 4.215 per cent. Among commodities, Gold futures extended its rally to quote near $2,430 levels. Brent Crude Oil futures languished around the $85 per barrel mark.

Equity markets, in the Asia-Pacific region, exhibited a mixed trend this morning. The Australian stock indexes slipped up to 0.1 per cent each. Kospi too was down 0.1 per cent. Japan’s Nikkei, however, rose 0.5 per cent, and Taiwan gained 0.4 per cent.

FII, DII trading activity

Foreign institutional investors (FIIs) were net buyers of stocks worth Rs 2,684.78 crore in the cash market on July 15. Domestic institutional investors (DIIs), on the other hand, net sold shares to the tune of Rs 331 crore yesterday.

In the derivatives segment, FIIs net purchased 20,573 contracts of index futures, amounting to Rs 1,335.17 crore on Monday. FIIs net bought 14,196 contracts of Nifty futures, and added 3,755 contracts of Bank Nifty futures.

Pursuant to which, FIIs long-short ratio in index futures rose above 4:1. This ratio means 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 80.43 per cent, while shorts stood at 19.57 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 16 - Should you be a buyer or seller in the Nifty, Bank Nifty today? Here’s what market experts recommend:

Outlook on the Nifty 50 by 5Paisa

Since there are no signs of reversal yet, the overall trend remains positive and hence traders should continue to trade with a positive bias. However, the RSI readings on the Nifty have now entered the overbought zone and hence, one should be watchful of the near term support in the index.

The immediate support for Nifty is placed around 24,400 followed by 24,250. Traders are advised to keep a trailing stop loss method and ride the trend. On the higher side, the index is now trading around the 161.8 percent retracement level of the recent corrective phase around 24,600. A continuation of the uptrend could result in the index heading towards the 25,000 mark.

However, because of the overbought set-ups, we advise to also start booking some profits at higher levels on trading long positions.

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

The Nifty sustained its upward trajectory, demonstrating resilience and confidence, as it reached unprecedented levels throughout the session and eventually settled a tad below the 24,600 zone.

The truncated week commenced with a small-bodied ‘Doji’ formation at the record-high zone, showcasing indecisiveness among the counterparties as the Nifty approached the golden retracement zone on the daily chart.

From a technical standpoint, the zone encompassing the golden ratio, denoted by 24,610, is likely to be seen as the pivot zone, and a sustainable breakthrough could only boost further momentum. On the lower end, 24,500 – 24,400 is expected to cushion any upcoming blips, followed by the sacrosanct support of 24,150.

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

Technically, the Nifty has formed a ‘Doji’ candle near the resistance zone, indicating uncertainty. Thus, the high of this 'Doji' candle, which is around 24,635, will act as a short-term hurdle for the index. If the index manages to close above it, then the rally can extend towards the 24,800-25,000 levels.

The Bank Nifty formed a bullish candle after taking support near the 21-Days Exponential Moving Average (21-DEMA). The 21-DEMA is positioned near 51,915, while the recent swing low is situated near 51,750. As long as the index holds above 51,750, a buy-on-dips strategy should be adopted in the Bank Nifty. On the upside, 52,800 and 53,000 will serve as strong resistance levels.

Ashwin Ramani, Derivatives & Technical Analyst, SAMCO Securities

All Strikes from 24,200 until 24,400 saw call writers exiting (bears exit) and put writing (bulls’ entry). Strong put writing was observed at the 24,600 Strike in the Index. The put writers (2.56 lakh contracts) lead the call writers (1.43 lakh contracts) by a fair margin at the 24,500 Strike and the option activity at this strike will provide cues about Nifty’s future direction.

On the Bank Nifty, the 52,500 Strike saw significant put writing. The put writers (Bulls) have massive positions built at the 52,500 Strike and the option activity at this strike will provide cues about Bank Nifty’s direction in the coming week.

Rupak De, Senior Technical Analyst, LKP Securities

On the daily chart, a ‘Doji’ pattern has formed, indicating indecisiveness on the Nifty. A fall below 24,520 might trigger near-term panic in the market. A fall below 24,250 might take the index towards 24,200-24,180. On the higher end, resistance is placed at 24,650, above which further upside looks possible.

The Bank Nifty looks poised to give a breakout from the recent consolidation. The index has been sustaining above the critical moving average. On the higher end, it might move up towards 53,000 once it sustains above 52,500. Significant put writing is visible at 52,500, which might provide strength to the Bank Nifty bulls. On the other hand, failure to move above 52,500 in the initial hour might attract selling pressure.

Stocks in F&O ban period

A total of 8 stocks are in futures & options (F&O) ban period on Tuesday - Aditya Birla Fashion Retail, Chambal Fertiliser, GMR Infra, GNFC, Hindustan Copper, India Cements, Indus Tower and RBL Bank. 

Primary market update

Seven SME IPOs, two on the BSE and five on the NSE will be available for subscription on Tuesday.

Kataria Industries Rs 54.58 crore public share sale and Macobs Technologies Rs 19.46 crore issue to open for subscription on the NSE today. The former share sale is in the price band of Rs 91 – Rs 96; while, the latter is offering stocks in Rs 71 – Rs 75 band.

Meanwhile, Prizor Viztech and Sati Poly Plast were subscribed up to 54.77 times and 129.20 times at the end of Day 2 of the offer period on Monday. Tunwal E-Motors issue was subscribed up to 1.9 times on Day 1.

On the BSE, Aelea Commodities and Three M Paper Boards will close for subscription today.