Trading guide July 11: Global shares, GIFT Nifty hint positive open; TCS Q1

All you need to know before market opens on Thursday: The S&P 500 crossed 5,600-mark, Asian shares rallied up to 1% this morning; FIIs pared long holdings in index futures; Ambey Labs to list

Pre-market update Thursday, July 11, 2024: Equity benchmark indices – the BSE Sensex and the Nifty – are likely to start Thursday’s trading session on a cautiously optimistic note ahead of TCS results.

At 07:00 AM, GIFT Nifty futures quoted around 24,395 levels and against the Nifty July futures close of 24,355 yesterday.

The market may witness a tug of war between the bulls and bears today on account of the weekly Nifty options expiry. Positive cues from Asian peers may aid the sentiment to some extent; however, experts believe the Nifty may face stiff resistance near about 24,460 levels.

 

Global mood

The US market ended with solid gains on Wednesday, up over 1 per cent, with the S&P 500 topping the 5,600-mark for the first-time ever. Tonight, the focus will be on CPI-inflation, which is expected to have softened to 3.1 per cent in June as compared to 3.3 per cent in May.

The US 10-year bond yield eased a wee bit to 4.28 per cent. Among commodities, Gold futures edged higher to $2,380 per ounce, while Brent Crude Oil futures hovered around the $85 per barrel levels.

Equity markets, in the Asia-Pacific region, were trading on a buoyant note this morning. The Australian stock indexes surged around 0.9 per cent each. Japan’s Nikkei, Kospi and Taiwan too up nearly 1 per cent each.

FII, DII trading activity

Foreign institutional investors (FIIs) were net buyers in the cash segment for sixth fifth straight trading session on July 10. They net bought shares to the tune of Rs 583.96 crore. Domestic institutional investors (DIIs) were net buyers of stocks worth Rs 1,082.40 crore yesterday.

In the derivatives segment, FIIs turned aggressive sellers after a long time; they net sold 15,656 contracts amounting to Rs 3,424.99 crore yesterday. FIIs net sold 15,656 contracts in Nifty futures, and 29,903 contracts of Bank Nifty futures.

FIIs index long-short ratio dropped to 4:1 from above 5:1 in the preceding five trading sessions; meaning foreign investors now hold 4 long positions for every bet on the short side in index futures. The FIIs net index longs at the end of Wednesday’s stood at 79.77 per cent, while shorts at 20.23 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. 

F&O Nifty weekly expiry cues

The Nifty PCR for options expiry on July 11 (this Thursday) stands at 0.73; indicating presence of higher open positions in Nifty Call options versus Puts.

The highest OI (open interest) among Nifty Calls is seen at 24,500 followed by 24,600, 24,400 and 25,000. Whereas, highest OI in Nifty Puts is seen at 24,000 Strike Price followed by 24,200 and 24,300.

The 24,400 and 24,500 saw highest OI buildup in trades yesterday; thus indicating potential resistance around 24,440 – 24,500 levels. 

Trading strategy for Thursday, July 11 - Should you be a buyer or seller in the Nifty, Bank Nifty today? Here’s what market experts recommend:

Rajesh Bhosale, Equity Technical Analyst, Angel One

Currently, prices remain elevated and are trading within a range, suggesting that market participants are awaiting a catalyst for decisive movements. Going ahead, the upcoming results season could potentially provide such a catalyst; any disappointing results within heavyweights might finally trigger the overdue price correction.

For Thursday, the trading range is observed between 24,140 – 24,100 on the downside and 24,460 – 24,500 on the upside, marking key levels for the weekly expiry. Traders should monitor these levels closely and adjust their strategies accordingly.

Ashwin Ramani, Derivatives & Technical Analyst, SAMCO Securities

The Nifty has formed a hanging man pattern on the daily chart, which is considered to be a bearish reversal signal. The 24,400 & 24,500 Strike witnessed put writers (Bulls) exiting and call writing, which led to a sharp down move in the Index on Wednesday.

The put-call ratio (PCR), known as the sentiment indicator, breached the 1.5 level mark for just the second time in 2024 and ended at 1.49. It is advisable to exercise caution as there are some signs of market overheating at the moment. The option activity at the 24,200 Strike will provide cues about Nifty’s upcoming direction.

On the Bank Nifty, the call writers (Bears) have strengthened their position at the 52,500 Strike. The 51,900 level is likely to act as strong support for Bank Nifty. A break below this level can lead to initiation of fresh shorts.

Om Mehra, Technical Analyst, SAMCO Securities

On Wednesday, the intra-day fall triggered Nifty to breach its previous swing low of 24,168, indicating a slight weakening of the bullish trend. However, the support of the rising trendline remains around 24,050. If this level is broken, Nifty could decline further towards 23,900. To resume the uptrend, Nifty needs to surpass the 24,460 mark.

On the Bank Nifty, a bearish daily candle was formed with the open and high being the same. If breached, the immediate support at 51,990 could lead to a decline towards the 51,300 - 51,200 levels. The 10-day moving average (DMA) now acts as immediate resistance and is around 52,600. Additionally, the daily RSI has slipped from 60 to 57 levels, indicating a weakening of the primary trend.

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

Technically, the Nifty has engulfed its previous day’s bullish candle and formed a hanging man candle near the all-time high. According to this pattern, 24,461 will act as a short-term hurdle for the index. On the downside, 24,200 and 24,000 will act as good support for the index.

The Bank Nifty is currently placed near the lower end of the short-term consolidation zone (52,000 - 53,360). If the Bank Nifty maintains its 52,000 support level, a relief rally is probable. On the flip side, sustenance below 52,000 levels could trigger further weakness in the Bank Nifty.

Rupak De, Senior Technical Analyst, LKP Securities

A bearish engulfing pattern has formed on the daily chart. Additionally, heavy call writing coupled with decent put unwinding ahead of the weekly expiry suggests the possibility of a correction. Immediate support is placed at 24,270. Below 24,270, the Nifty might fall towards 24,100-24,000. On the higher end, resistance is placed at 24,350-24,400. Expect another round of short covering above 24,400.

Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities

The Bank Nifty index continued to witness selling pressure from higher levels and was unable to surpass the 52,500 mark, where call writers are active. The index is trading near a crucial support zone of 52,000 – 51,800. If it manages to hold this level, it can witness a pullback rally towards 52,500. A sustained move above 52,500 will open up gates for 53,000, but if it fails to hold the support of 51,800, it can decline further towards the 51,300 – 51,000 zone.

New listings 

SME - Ambey Laboratories to debut on the bourses on Thursday. Grey market premium trend indicates a listing gain of up to 40 per cent for the stock. 

Stocks in F&O ban period

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

Primary market update

Sahaj Solar IPO to open for subscription today on the SME platform. The company plans to raise up to RS 37.73 crore by way of sale of 20.96 lakh equity shares in the price band of Rs 171 – Rs 180 per equity share. .k 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.