The September F&O series will run as a series of two halves. The first half, which saw the Nifty 50 hitting a new record high, breaching 20,000 levels and beyond as well. But the second half started with HDFC Bank’s rating downgrade and from there it was all downhill. Two record weeks were followed by the worst week in seven months.
This week has just been one of consolidation. However, in the first 90 minutes of Wednesday, the price action almost gave the impression that more pain was likely for the Nifty 50. Chartists had highlighted 19,550 as key support for the Nifty 50 and it is reversed from these levels exactly after hitting an intraday low. of 19,554.
Index heavyweights like Reliance Industries, ITC, HUL and Axis Bank raised their hands to lead the rally in the Nifty 50. The index finally closed 170 points away from the day’s low. For the September series, the Nifty 50 is up over 460 points, making it its fifth positive F&O series in the last six months.
What do the experts say?
Nomura upgraded India to overweight on Wednesday, saying recent weakness caused by rising oil prices is an opportunity to increase exposure.
“While this weakness may persist in the near term, representing even better timing, we believe the window of opportunity may not be open for too long. Valuations are expensive but will likely remain so in a scenario of political/governmental continuity. “Ahead of the May 2024 elections, China’s reorientation and continued high oil prices are potential risks,” wrote Nomura’s Chetan Seth.
What do the Nifty 50 charts indicate?
Has the recovery of the Nifty 50 on Wednesday given a glimmer of hope to the bulls and chartists? Let’s find out:
Nagaraj Shetti of HDFC Securities termed the market action as an indication of an engulfing uptrend forming on the charts. After a false breakout on Wednesday, he sees a greater possibility of a bullish breakout at 19,750 levels. Immediate support for the Nifty 50 lies around 19,600 – 19,550 and a decisive move above 19,750 may bring the index back to around 20,000.
The Nifty 50 has formed a bullish reversal formation near the 50-DMA, which indicates a strong possibility of a further uptrend from current levels, said Shrikant Chouhan of Kotak Securities. 19,630 now constitutes a key support for traders, above which the index can move towards 19,800 – 19,825.
Rupak De of LKP Securities said a break above 19,750 is required for the Nifty 50 to see a substantial rally. A decisive move above this level could take the index towards 19,900. On the downside, support is estimated at 19,600.
Nifty Bank gains 600 points in this series so far
On Wednesday, at the day’s low, the Nifty Bank was down almost 2,000 points from its September 15 high of 46,310. Despite the decline, the index is up 600 so far points compared to the September series. The index underperformed the Nifty 50 on Wednesday thanks to HDFC Bank and ICICI Bank, but recovered 400 points from the day’s low to end little changed.
Despite Wednesday’s rally, Nifty Bank remains below its 20-day moving average of 45,000 and a break above it is required to trigger a short-covering move, said Kunal Shah of LKP Securities . Currently, Nifty Bank is trading in a wide range of 44,200-45,000 and a buy-on-the-dip approach could be favorable for the index, he said.
Vedanta shares fall to 31-month low
Vedanta shares fell 7% on Wednesday to finish at the lowest level since January 2021. The fall came after Moody’s downgraded some of the bonds issued by the company’s parent and its wholly-owned subsidiary. The stock is down more than 30% so far in 2023.
“I think at current valuations we would expect earnings to be around Rs 30 over the next two to three years. 8-9 times is very easily possible. So I think fair value would be between Rs 270 and Rs 280. As a long-term investor, at these valuations, you should not worry about exiting the stock, the big risk is that the group defaults and something catastrophic happens, but given the assets they have in their portfolio, I don’t think that’s something that’s going to happen,” said Sharad Avasthi of SMIFS. CNBC-TV18 Wednesday.
What do F&O signals indicate?
Let’s take a look at stocks that were short covered ahead of Thursday’s expiration session, meaning an increase in price but a decrease in open interest:
|Action||Price change||Change of RO|
|Aditya Birla Capital||3.37%||-52.40%|
First publication: September 27, 2023 10:13 p.m. STI