Trade Setup for November 1: Nifty 50 remains on the edge ahead of Fed rate decision
KV Prasad Jun 13, 2022, 06:35 AM IST (Published)
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Summary
October saw Foreign Portfolio Investors withdrawing nearly $2.5 billion from Indian equities, taking the two-month outflow to well in excess of $5 billion.
A tumultous October finally came to an end on Tuesday with the Nifty 50 ending 2.8% lower. This turned out to be the first negative October for the index since 2018. The Nifty failed to gain for the third day in a row as the market now awaits a key interest rate decision from the US Federal Reserve late Wednesday night.
The month also saw Foreign Portfolio Investors withdrawing nearly $2.5 billion from Indian equities, taking the two-month outflow to well in excess of $5 billion. You can read more on that here.
For Wednesday’s session, the market will react to some strong results from Larsen & Toubro along with other result reactions from Bharti Airtel, Tata Consumer Products, JSPL among others. Britannia, Hero MotoCorp, Sun Pharma and Tata Steel are the Nifty 50 constituents reporting results in mid-week trading.
The market is currently in a 200-point range. It is unwilling to go past the 19,250 mark, but is holding on to the 19,000 mark on the downside as well.
Kunal Shah of LKP Securities said that the Nifty 50 is in a range between 18,900 and 19,250 and a breakout in either direction will trigger trending moves. “Broadly, the trend remains negative and only a close above 19,300 will signal a resumption of the uptrend,” he said.
The Nifty is likely to consolidate within this range of 18,980 – 19,200, said Shrikant Chouhan of Kotak Securities. He expects the markets to see mixed trends in the near-to-medium term with traders preferring to exit long positions below 18,980 levels.
After a brief surge back above the 43,000 mark on Monday, the Nifty Bank could not sustain the momentum, shedding another 200 points on Tuesday. The index had its first negative October since 2012 and the worst October since 2009. At current levels, the index is down 3,500 points from its recent peak of 46,310.
LKP’s Shah said that the upside resistance for the Nifty Bank is now at 43,500 and until there’s a breakout above this level, the overall trend of the index remains negative. On the downside, support is at 42,400 and a break below that may drag the index down to 41,500 – 41,000 range.
Mehul Kothari of Anand Rathi said that the Nifty Bank is stuck in a 43,200 – 42,600 range and only a move on either side can provide a clear direction to the index going foward.
What Are The F&O Cues Indicating?
Nifty 50’s November futures added 0.8% and 84,500 shares in Open Interest. They are now trading at a premium of 78.6 points from 80 points earlier. On the other hand, the Nifty Bank November futures shed 0.3% or 7,710 shares in Open Interest. Nifty 50’s Put-Call Ratio is now at 0.91 from 1.09 earlier.
GNFC has now entered the F&O ban from Wednesday’s trading session.
Nifty 50 on the Call side for November 2 expiry:
For this Thursday’s expiry, the Nifty 50 call strikes between 19,100 and 19,250 have seen addition in Open Interest, with the 19,200 call seeing the maximum Open Interest addition.
Strike |
OI Change |
Premium |
19,200 |
45.06 Lakh Added |
36.05 |
19,250 |
41.37 Lakh Added |
22.65 |
19,100 |
23.87 Lakh Added |
76.85 |
19,150 |
18.69 Lakh Added |
53.5 |
Nifty 50 on the Put side for November 2 expiry:
On the put side, while the 18,900 and 19,100 strikes for this Thursday’s expiry have seen Open Interest addition, the 19,000 strike has seen Open Interest shedding.
Strike |
OI Change |
Premium |
19,100 |
12.44 Lakh Added |
71.95 |
18,900 |
7.73 Lakh Added |
18.9 |
19,000 |
17.43 Lakh Shed |
37.15 |
Lets take a look at the stocks that added fresh long positions on Tuesday, meaning an increase in both price and Open Interest:
Stock |
Price Change |
OI Change |
MCX |
2.91% |
19.51% |
GNFC |
0.72% |
9.74% |
Coromandel International |
0.29% |
9.25% |
Alkem Laboratories |
0.81% |
8.58% |
Titan |
2.37% |
8.15% |
Lets take a look at the stocks that added fresh short positions on Tuesday, meaning a decrease in price but increase in Open Interest:
Stock |
Price Change |
OI Change |
Siemens |
-2.93% |
11.29% |
Petronet LNG |
-0.99% |
10.77% |
TVS Motor |
-0.91% |
8.66% |
LTIMindtree |
-1.59% |
8.42% |
Eicher Motors |
-1.88% |
4.66% |
Here are the stocks to watch out for ahead of Wednesday’s trading session:
- Larsen & Toubro: Management expects to “outperform” financial year 2024 order inflow guidance between 10% and 12% as well as revenue growth guidance between 12% and 15%. For the quarter, the company received orders worth ₹89,153 crore, 67% of which were international orders. More on that here.
- Bharti Airtel: Net profit down 31.8% from the June quarter to ₹1,341 crore, while revenue down 1.1% to ₹37,043.8 crore. Average Revenue per User (ARPU) at ₹203 from ₹190 quarter-on-quarter. India revenue up 10.9% year-on-year, while Africa revenue in constant currency terms up 19% from last year. Overall customer base at nearly 540 million across 16 countries.
- Tata Consumer Products: Net profit of ₹359 crore marginally higher than estimates of ₹328 crore. Revenue and EBITDA meet expectations, while EBITDA margin expands to 14.4% from 12.9% last year and higher than estimates of 14.1%.
- JSPL: September quarter revene at ₹12,250 crore misses expectations of ₹12,495 crore. Standalone EBITDA per tonne at ₹11,164, which was lower than expectations of ₹12,150. Share of exports increased to 13% from 12%, while net debt rose to ₹7,313 crore from ₹6,812 crore.
- Birlasoft: Reports constant currency revenue growth of 3.1%, higher than estimates that ranged between 2.3% and 2.5%. Margin rose 50 basis points despite wage hike impact for a month. Deal TCV at $271 million, up 86% sequentially and 63% year-on-year.
- Reliance, ONGC and OMCs: Windfall tax on crude petroleum will increase from ₹9,050 per tonne to ₹9,800 per tonne. Windfall tax on diesel will reduce from ₹4 per litre to ₹2 per litre. Windfall tax on petrol will remain nil, while that on ATF will be reduced to Nil from ₹1 per litre.
- Lupin: Gets Establishment Inspection Report (EIR) from the USFDA for its Mandideep Unit-2 manufacturing facility. The inspection closed with the facility getting an inspection classification of “No Action Indicated.”
- SBI Card & Payment Services: Launches Reliance SBI Card in collaboration with Reliance Retail.
- JSW Energy: Prashant Jain steps down as MD & CEO seeking early retirement from professional life to pursue personal interests. He will remain at his position till January 31, 2024.
What Are Global Cues Indicating?
Asian markets have opened higher ahead of the FOMC rate decision with most major markets trading with strong gains.
The Nikkei 225 has opened 2% higher, while the Topix is up a similar quantum. The Kospi in South Korea is up 0.8%, while the Kosdaq has risen 1.3% at the start of trade.
Futures of the Hang Seng are indicating a subdued start to the trading day but with a positive bias.
US markets ended higher overnight with benchmark indices posting their third consecutive monthly loss.
The Dow Jones advanced 0.4%, while the S&P 500 gained 0.65% and the Nasdaq ended with gains of 0.5%.
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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow