Stock market today: Indian equities traded lower in morning deals on Wednesday as elevated crude oil prices and caution ahead of key inflation data from India and the US weighed on investor sentiment.
The Nifty 50 fell 0.42% to 24,369.40, while the BSE Sensex declined 0.44% to 77,814.24 as of 10:46 IST. The weakness was broad-based, with 13 of the 16 major sectoral indices trading in the red. The broader market also remained under pressure, with both the Nifty Midcap and Smallcap indices declining around 0.3%.
Crude oil prices hovered around $90 a barrel as hopes of a near-term agreement to ease tensions in the Middle East and reopen the Strait of Hormuz weakened. Higher oil prices remain a concern for India, the world’s third-largest oil importer, as they could increase the country’s import bill and add to inflationary pressures.
Investors are also awaiting India’s inflation data, due after market hours, for cues on the impact of higher crude prices and a weak monsoon on the domestic economy. In the US, the consumer inflation report due later in the day, followed by producer price data this week, could influence expectations around the Federal Reserve’s future interest-rate decisions.
Market Outlook by Jay Thakkar, Vice President & Head of Derivatives and Quant Research, ICICI Securities
Nifty 50
Nifty 50 ended the weekly expiry on the negative side and with that the consolidating range of 100 points broke on the lower side. Since, the introduction of CAS there was uncertainty wrt to the closing of Nifty on the 1st weekly expiry of August series but since then things have started to normalize and now in the 2nd weekly expiry, the close was well within the 20-25 points range. This has now led to fall in India VIX and more importantly the IVs, hence the volumes should be back to normal in the derivatives as well as equity cash segment.
Now, the recent rise from 23,600 to 24,600 levels approximately has witnessed some breather and the Index is retracing its recent up move. The options data suggests that 24,000 strike has the highest put base of this series whereas 25,000 strike has the highest call base, so the monthly range is of 1,000 points.
Now, within this broader range, 24,600 and 24,800 are the two intermediate hurdles, whereas 24,200 is the immediate support, which is around the gap area. The FII money flow data suggests that they have been buyer recently and they have also covered their Index short positions significantly and it now stands at just 1.52 lakh contracts from 2.72 lakh contracts a month ago. The international geo-political tensions have now cooled-off a bit and with that the international crude oil prices have also cooled-off, so based on these observations, a buy on dips strategy on Nifty is recommended until 24,000 levels are not broken.
Stocks To Buy in the near-term – Jay Thakkar
Jay Thakkar of ICICI Securities recommends Siemens Futures, Aurobindo Pharma Futures, and Shriram Finance Futures.
Buy Siemens Futures in the range of ₹4,030-4,070; stop loss below at ₹3,890; Targets at ₹4,220 and ₹4,300
Siemens has closed in the positive territory in the last trading session and with that it has also completed the re-test of the breakout level. With the recent up move the open interest has also increased on an overall basis, hence there is a clear long built up in the stock. As per the options data, there has been significant put additions at the lower levels of which 3,900 strike has the highest put base hence that is the immediate support whereas 4,000 is an immediate resistance as that has the highest call base and once those levels are taken off the stock is likely to inch towards 4,200 swiftly. It is also trading well above its max pain level of 3,900 which will also act as a support in the near term.
Buy Aurobindo Pharma Futures in the range of ₹1,650-1,660 with a stop loss below ₹1,600 for the Targets of ₹1,740-1,780
Aurobindo Pharma has taken off its HERE all-time high levels and with that there has been an overall increase in the open interest in the futures segment which indicates that the trend is positive. As per the options data, there has been put additions witnessed at the lower levels of which 1,600 strike has the highest put base and 1,700 strike has the highest call base, so the immediate range is 1,700-1,600 and beyond that the stock will continue to move higher in the blue-sky zone. It is also trading well above its max pain level of 1,600 which will also act as a support and the Nifty Pharma sector has been trending higher since past 3 months now and it is one of the outperforming sectors.
Buy Shriram Finance Futures in the range of ₹1,110-1,125; stop loss below ₹1,090; Targets ₹1,160-1,190
Shriram Finance has also taken off its multiple swing resistance and more importantly the 1,100 levels which was acting as a hurdle since past few trading sessions. Recently, there has been a decrease in open interest in the futures segment which is some profit booking, however, the overall trend indicates that the market participants are long in this stock, hence a buy on dips strategy is recommended for this stock.
As per the options data, the 1,000 strike is the most important strike as it has the highest put base this stock has call base in the in the money call option strikes as well which is unusual but if the stock inches higher than these writers will come to cover which will fuel further upward momentum. The stock is also trading above its max pain level of 1,040 which will act as a short-term support.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
