Does the Nifty 50 template remain to sell-on-rallies in this truncated week?

The Nifty 50 is showing no strength whatsoever at higher levels. It began the October F&O series on a positive note, but that session ended with more questions than answers.

For ending the week with gains after shedding over 2.5 percent in the previous week, the Nifty 50 had to close above 19,674. It failed to do so. Moreover, it even corrected nearly 150 points from the day’s high of 19,766 to close below the 19,650 mark.

There are plenty of triggers to react to for the market in this truncated week. Firstly, all eyes will be on the Reserve Bank of India’s monetary policy decision on Thursday. Second, with the quarter now ending, companies will start coming out with their business updates and quarterly results. Third, the market will react to macro data emerging and also to the auto sales numbers reported over the long weekend.

What Are The Experts Saying?

Samir Arora of Helios Capital told CNBC-TV18 that one can’t be nervous about the market at the current juncture and thait their returns are in-line with historical annualised basis. He also said that the US market strength until two months ago was despite the Fed commentary and that their returns on a year-to-date basis are still strong.

“India’s inclusion in the JP Morgan Government Bond Index-Emerging Markets (GBI-EM) sets stage for higher foreign flows into Indian bonds across sovereign and sub-sovereign issuances as well as good quality private corporate paper,” said Hemant Kanawala of Kotak Mahindra Life Insurance. “The lower cost of capital will support businesses in their growth and also improve valuations over time. We remain constructive on equity markets and suggest adding to equity exposure on any significant correction,” he added.

What Are The Nifty 50 Charts Indicating?

A strong session on Friday or a close below 19,650 or a second straight weekly loss? Are chartists seeing the glass as half full or half empty for the Nifty 50? Here’s what they said:

Nagaraj Shetti of HDFC Securities believes that only a sustained move above levels of 19,770 could bring the bulls back into action. While he expects the bulls to hold the key support of 19,550 on the downside, failing which, the sharp selling momentum can resume on the Nifty 50.

The market is due for a short-term upward pull back in the near-term, said Amol Athawale of Kotak Securities. He only expects a move towards 19,900 – 20,000 for the Nifty 50 if it trades above the 19,750 mark. On the other hand, the index may fall towards 19,400 or even 19,200 if it slips below the 19,490 mark.

Ashwin Ramani of SAMCO Securities said that 19,500 and 19,800 are key levels for the Nifty 50 going forward and a break on either side will provide cues about the future direction of the index. He further said that the Nifty 50 has formed a bullish harami candle on the daily chart.

Nifty Bank Stronger Than The Nifty 50?

The Nifty Bank snapped a three-day losing streak on Friday but also faced pressure at higher levels. The index closed nearly 200 points off the day’s high. The index also closed marginally below the 44,612 mark that it needed to close above for posting a weekly gain.

Kunal Shah of LKP Securities said that the Nifty Bank successfully defended the support at 44,200 but continues to face hurdles at the 45,000 mark. This 800-point range is the key for the Nifty Bank and will determine the next trending moves for it.

Athawale of Kotak Securities said that 44,750 continues to be a key resistance level for the Nifty Bank and as long as the index trades below it, the bearish sentiment will continue. He expects the index to slip towards 44,100 – 43,800 while an uptrend towards 45,000 – 45,200 is possible only above 44,750.

However, Mehul Kothari of Anand Rathi expects the Nifty Bank to outperform in October as the index has not closed in the red in the last 10 October’s. “On the levels front, 44,000 – 43,600 seems to be a very strong base for the short term and on the upside a move above 45,000 might bring the momentum back in the index,” he said.

Stock Of The Day: Vedanta

After its best single-day gain in 2023 on Friday, Vedanta will possibly be the stock of the day on Tuesday as well. The company announced a vertical split into six different listed entities, in a process that is likely to be completed by financial year 2025. You can read more on that here. Vedanta’s subsidiary Hindustan Zinc will also be in focus on Tuesday after it announced its own corporate restructuring plans.

“The stock has not been very consistent. So, not for the fainthearted and it is best to take tactical play there, not something very long-term. If you have it and you are not getting value, you will have to definitely wait for a simple reason that if there is a possibility of improvement, it is on the way up because they will want to do things which create value so that the parent company, Vedanta Resources, has to get bailed out. So that will not happen if this business suffers. So, I am sure there is some linearity to improvement that can happen, and people would start seeing some value getting created in the near-term as well,” said Prakash Diwan, market expert.

What Are The F&O Cues Indicating?

Nifty 50’s October futures shed 3.2 percent or 3.14 lakh shares in Open Interest. They are now trading at a premium of 70.7 points compared to 113.55 points earlier. On the other hand, Nifty Bank’s futures shed 4.5 percent and 99,420 shares in Open Interest. Nifty 50’s Put-Call Ratio stood at 1.02 from 0.98 earlier.

No stocks are currently in the F&O ban list.

Nifty 50 on the Call side for October 5 expiry:

For this Thursday’s expiry, the Nifty 50 strikes between 19,700 and 19,850 have seen addition in Open Interest. The 19,800 strike has seen the maximum Open Interest addition for this Thursday’s expiry.

Nifty 50 on the Put side for October 5 expiry:

On the put side, the Nifty 50 strikes between 19,500 and 19,600 have seen Open Interest addition for this Thursday’s expiry.

Lets take a look at the stocks that added fresh long positions on Friday, meaning an increase in price and Open Interest:

Lets take a look at the stocks that added fresh short positions on Friday, meaning a decrease in price but increase in Open Interest:

Here are the stocks to watch out for ahead of Tuesday’s trading session:

Vedanta: Announces demerger of diversified businesses unlocking significant value. Shareholders to get one share each of five newly listed companies for every one share of Vedanta Ltd. held.

Hindustan Zinc: Mined metal in the September quarter down 1 percent from last year. Integrated saleable metal down 2 percent, while saleable silver production down 7 percent from last year. Wind Power generation rose by 27 percent during the quarter.

Coal India: Total production in the first half of financial year 2024 is 43 percent of the full-year target of 780 MT. Overall production and offtake rises by 12.6 percent each in September compared to last year.

UltraTech Cement: Total consolidated sales volume up 16 percent year-on-year to 26.69 million tonnes. However, the sales volume is down 11 percent from the June quarter. Grey cement volumes up 15 percent year-on-year, while White Cement volumes rise by 11 percent from last year.

Cipla: Divests 51 percent stake in UAE-based Saba for $6 million.

Mahanagar Gas: CNG prices cut by Rs 3 per kg, while domestic PNG prices cut by Rs 2 per SCM in and around Mumbai. The new rates are already effective from October 1.

SML Isuzu: Bus and truck prices increased in the range of Rs 20,000 – Rs 30,000 each. School bus price increase will be in the range of Rs 1.95 lakh – Rs 2.45 lakh. Price hikes to cover the increased input cost due to the implementation of the Fire Alarm and Protection System and general inflation.

Ramkrishna Forgings: Board approves proposal to raise up to Rs 1,000 crore via QIP.

Granules India: Receives ANDA approval for Losartan and Hydrochlorothiazide Tablets used for the treatment of Hypertension to lower blood pressure & reduce risk of stroke in patients with hypertension and left ventricular hypertrophy.

Godrej Agrovet: To set up an integrated palm oil complex in Telangana with an investment of Rs 300 crore.

Blue Dart: To implement a general price increase from January 1, 2024 of 9.6 percent on average compared to 2023. Customers signing up from October 1- December 31 will not be impacted by price increase.

Kalpataru Projects: Gets new orders worth Rs 1,016 crore.

Eris Life: Signs term-loan agreement to avail a rupee term loan facility worth Rs 212 crore from HDFC Bank.

RVNL: Emerges lowest bidder for Himachal Pradesh State Electricity Board’s project worth Rs 1,097.68 crore.

Lets also look at the auto companies that have reported sales figures for the month of September so far:

Maruti Suzuki: September Auto sales below estimates. Total sales rise 2.8 percent year-on-year, while exports rise 5 percent.

Mahindra & Mahindra: Total sales up 17 percent year-on-year, led by SUVs, whose sales went up by 20 percent from last year. However, tractor sales are under pressure, declining by 11 percent from last year.

Eicher Motors: Royal Enfield sales down 4 percent from last year, while commercial vehicle sales grow by 8.6 percent from last year.

Hero MotoCorp: September sales up 3.2 percent to 5.36 lakh units, higher than Nomura estimates. Exports at 16,710 units from 12,290 units last year.

TVS Motor: Overall sales grow by 6 percent to 4.02 lakh units led by Motorcycle sales, which rise by 10 percent year-on-year.

Tata Motors: Total commercial vehicle sales in September up 12 percent from last year. For the September quarter, CV sales rose 4 percent, while PV sales declined by 3 percent.