Nifty 50 to see more pain on weekly options expiration day?

Geopolitical tensions, profit booking, rising crude prices and a resurgence of the US dollar: a combination of all these factors led the Nifty 50 to witness its worst single-day fall in two months. It closed below the 20,000 mark for the first time in five sessions.

What do the experts say?

Mahesh Nandurkar of Jefferies, after meeting ministers, bureaucrats and experts in New Delhi, believes that while policy continuity is likely in 2024, fiscal pressures are piling up with rising oil prices. “A possible reallocation towards social spending could lead to additional pressure on PSU disinvestment,” he wrote. Jefferies therefore reduced its weighting on real estate, mid-sized industrials and commodities, and added Bharti Airtel and increased its cash exposure.

“Valuations are becoming increasingly uncomfortable, particularly in the small and mid-cap sector. The front-end market still appears to be one where buying on the dip may be the preferred strategy. The consumer space, metals and some large-cap banks can be the drivers in keeping the Nifty.50 dynamic,” said Jaykrishna Gandhi of Emkay Global Financial Services.

What do the Nifty 50 charts indicate?

The Nifty 50 ended just above the 19,900 mark, with its intraday low of 19,880 being the lowest since September 11.

“We believe the intraday market texture is weak, but due to temporary oversold conditions, we may witness limited activity in the near future,” said Shrikant Chouhan of Kotak Securities. For bulls, 20,000 – 20,030 may act as immediate resistance while downside support could be seen between 19,825 – 19,775.

Nagaraj Shetti of HDFC Securities expects further weakness in the Nifty 50 in the near term as the overall chart formation signals a reversal trend from the near-term high to recent highs. He expects the Nifty 50 to test crucial bearish supports at 19,750-19,600 in the near term, while any attempt at a bounce could find strong resistance around 20,050-20,100.

The Nifty 50 fell below its previous high on the daily chart, indicating a decline in bullish sentiment, said Rupak De of LKP Securities. A negative crossover is also evident on the daily RSI. He expects the Nifty 50 to fall towards the 19,700-19,630 levels in the near term. Selling during a rally can be a favorable strategy as long as the index remains below 20,000.

46,000 now a resistance for Nifty Bank

Nifty Bank cannot be blamed for the fall it witnessed on Wednesday as the majority of the fall was due to HDFC Bank. The index fell nearly 600 points midweek, marking its worst single-day decline since August 2. The banking index is now down 800 points over the past two trading sessions and now more than 1,000 points away from its record high of 46,369.

Crossing the key support level of 46,000 has now made it resistance for Nifty Bank, said Kunal Shah of LKP Securities. Immediate downside support is now at 45,300, the point from which the index reversed on Wednesday (45,276), and a break below could even take the index back to levels of 45,000.

Mehul Kothari of Anand Rathi expects some stability for the Nifty Bank around the key support levels of 45,000 to 44,800. He now expects the index to rise again only above the levels of 46,400.

nifty bank thursday 2

HDFC Bank: Key Levels to Watch Now

Now moving on to the big elephant in the room, HDFC Bank contributed 50% of the decline in the Nifty 50 on Wednesday. The stock ended down 4 percent after Nomura downgraded the stock to neutral and also cut its price target citing four negative surprises. Other brokerages may not have downgraded the stock but also reduced their respective price targets.

Concerns on the street stemmed from HDFC Ltd.’s rising corporate NPAs, which the bank highlighted at a recent analyst meet.

“We own one of the largest banks, but our active position in this sector is quite limited. So overall, we are conscious of the fact that as the company goes through the process of merger, some of these things will need to be ironed out over the next couple of quarters, and then the synergy benefits will trickle in. But we see this more as a passing impact rather than a long-standing quality issue in terms of is about the book they are operating,” said Trideep Bhattacharya of Edelweiss AMC. CNBC-TV18 when asked about HDFC Bank.

hdfc bank

What do F&O signals indicate?

September futures of Nifty 50 lost 11 per cent or 11.88 lakh shares in Open Interest on Wednesday. They are now trading at a premium of 70.65 points compared to 45.55 points previously. September futures of Nifty Bank also lost 10.9 percent or 1.63 lakh Open Interest shares. The Put-Call ratio of Nifty 50 is now 0.79 compared to 1.1 earlier.

Hindustan Copper is back on the F&O banned list from today’s session, while IEX and REC are off-ban. PNB, Delta Corp, Indiabulls Housing Finance, Balrampur Chini, BHEL, Zee Entertainment, Manappuram Finance and Chambal Fertilizers remain in the ban period.

Nifty 50 Call side for September 21 expiry:

For today’s weekly options expiry, Nifty 50 call strikes between 19,900 and 20,100 saw an addition of open interest, with the 20,000 strike seeing the maximum addition of open interest.

Strike Change of RO Prime
20,000 1.6 crore added 20.4
20 100 95.1 Lakh added 5.1
19,950 71.5 Lakh added 37.6
19,900 50.84 Lakh added 63

Nifty 50 on Put side for September 21 expiry:

For today’s expiration, the Nifty 50 put strikes between 19,700 and 19,900 saw the addition of Open Interest. Although the 19,900 put saw the maximum open interest addition, the quantum is not as high as the 19,900 call addition.

Strike Change of RO Prime
19,900 36.93 Lakh added 43.65
19,700 33.69 Lakh added 5.05
19,800 21.41 Lakh added 3:55 p.m.

Let’s take a look at stocks that saw new short positions on Wednesday, meaning a drop in price but an increase in open interest:

Action Price change Change of RO
HDFC Bank -3.89% 12.48%
Motorcycle Hero -1.38% 8.86%
Shepherd Paintings -1.04% 7.86%
SBI Cards -1.27% 7.21%
Trusted Industries -2.14% 6.55%

Let’s take a look at the stocks that saw their long positions unwind on Wednesday, meaning a decline in both price and open interest:

Action Price change Change of RO
IPCA Laboratories -0.71% -8.75%
Ramco Cements -1.06% -5.70%
GNP -0.32% -4.33%
Coromandel International -1.31% -3.69%
Indian oil -0.65% -3.02%

Despite a weak market, some stocks also saw new long positions, meaning increased prices and open interest:

Action Price change Change of RO
Glenmark 1.38% 11.24%
Hindustan copper 1.18% 9.17%
Polycab 3.10% 6.48%
Axis Bank 0.55% 6.33%
PFC 0.28% 5.73%

Here are the stocks to watch ahead of Thursday’s trading session:

  • SJVN: The government will sell up to 4.92 percent stake in the company through an offer for sale. The OFS for non-retail investors will open on Thursday and for retail investors on Friday. Also consider fundraising during its board meeting on September 23.
  • Sheela Foam: Launches QIP to raise Rs 1,200 crore. Base size of Rs 1,000 crore with an option to increase worth Rs 200 crore. The indicative issue price is between Rs 1,078 and Rs 1,168.6 per share, representing a discount of 7.8% to CMP. Proceeds from QIP will be used in part to finance the proposed acquisition of Kurlon. Dilution of 10.5 percent to 11.4 percent of pre-issue share capital at the upper and lower ends of the price range.
  • Vedanta: Board of directors meeting Thursday to study fundraising.
  • HDFC Bank: Second day of defeats Wednesday. Top loser on the Nifty 50, contributing 50% of the decline.
  • Cipla: USFDA’s inspection of InvaGen’s manufacturing facility in Central Islip, Long Island, United States results in a Form 483 with five observations.
  • Infosys: Collaborates with NVIDIA to help businesses around the world increase productivity with generative AI.
  • Biocon: Biocon Biologics Obtains European Commission Approval for YESAFILI Biosimilar Aflibercept.
  • Apollo tires: Production of bias and OTR tires at the company’s manufacturing plant in Limda, Gujarat, has been stopped due to some concerns among the workshop employees regarding the renewal of the long-term settlement agreement . Negotiations are underway for an amicable resolution. Plans are in place to mitigate any supply disruption. No significant impact on operations at this stage.
  • What do the global signals indicate?

    Markets in the Asia-Pacific region opened lower, following Wall Street’s weak close.

    The Nikkei 225 is down 0.4 percent as the Bank of Japan begins its two-day policy meeting, while the Topix is ​​down 0.2 percent.

    South Korea’s Kospi is down 0.5 percent and the Kosdaq is trading down 0.4 percent.

    On the other hand, Hang Seng futures suggest a strong opening for the index.

    Benchmarks on Wall Street ended at the day’s lowest after the U.S. Federal Reserve indicated it was not yet finished raising interest rates.

    The Dow Jones fell nearly 80 points, while the S&P 500 fell 1 percent. The Nasdaq fell 1.53 percent, led by declines in Microsoft, Nvidia and Alphabet.

    Although the Fed left interest rates unchanged, it announced another hike and said it would begin cutting rates next year, signaling that they would remain high for a long time.

    Foreign and domestic investors were net sellers in the cash market on Wednesday.

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