The Nifty 50 index witnessed a positive opening for the week but it corrected sharply due to selling pressure at higher-level indices.
Analysts expect the index to continue its downward trend as a standoff between bulls and bears is leading to heightened volatility. However, if the index falls below the 24,600 levels, it could trigger correction and confirm a bearish breakdown of the head-and-shoulders pattern.
"Given the weakness in the broader markets, Friday's low (of) around 24,600, which aligns with the 89 DEMA, is crucial," said Rajesh Bhosale, equity technical analyst at Angel One.
He also added that the Nifty is consolidating within a defined trading range and a breakout from the range would give an indication for a directional move.
The markets on the daily chart formed a strong bearish candle, indicating further weakness in the market, said Hardik Matalia, derivative analyst at Choice Broking.
The immediate support for the index will be at 24,700, while resistance will be at 24,900-25,100 levels. He suggested a sell-on-rise strategy while also recommending caution in this volatile environment.
Bank Nifty opened with a huge gap up but, post the initial shoot-up, it saw profit booking and closed lower at 51,963. Despite the bearish candle on the daily chart, Bank Nifty managed to close above the 21-Day Exponential Moving Average support, which is placed at 51,915, said Hrishikesh Yedve, assistant vice president of technical and derivatives research at Asit C. Mehta Investment Intermediates Ltd.
"Inability to sustain at higher levels shows lack of strength and hence there is likely to be further consolidation before any meaningful upside. On the upside, 52,250–52,300 shall act as an immediate hurdle zone while 51,100–51,000 shall act as a crucial support zone," said Jatin Gedia, technical research analyst at Sharekhan by BNP Paribas.
Market Recap
Benchmark equity indices started the week on a negative note as investors assessed more quarterly results. Kotak Mahindra Bank Ltd. and Infosys Ltd. weighed on the key indices. However, gains in heavyweights HDFC Bank and Reliance Industries minimised the fall.
Nifty ended 0.29%, or 72.95 points, down at 24,781.10. Sensex lost 0.09%, or 73.48 points, to close at 81,151.27.
F&O Action
The Nifty October futures were down by 0.77% to 24,788 at a premium of 7 points, with the open interest down by 2.65%.
The Nifty Bank October futures were down by 0.59% to 52,040 at a premium of 78 points, while its open interest was down 2.3%.
The open interest distribution for the Nifty 50 Oct. 24 expiry series indicated most activity at 25,000 call strikes, with the 24,000 put strikes having maximum open interest.
For the Bank Nifty options expiry on Oct. 23, the maximum call open interest was at 52,500 and the maximum put open interest was at 51,500.
FII/DII Action
Overseas investors, commonly known as foreign portfolio investors, remained net sellers of Indian equities for the 16th consecutive session on Monday, while domestic institutional investors stayed net buyers for the 20th straight session.
The FPIs offloaded stocks worth Rs 2,262 crore, according to provisional data from the National Stock Exchange. The DIIs bought stocks worth Rs 3,226 crore.
Major Stocks In The News
Arkade Developers: The company launched residential and commercial projects in Bhandup, Mumbai, with an estimated sales value of Rs 760 crore. The project will have 432 residential units along with 43 commercial units, featuring a mix of 2 BHK and 3 BHK apartments.
Ola Electric: The company has clarified its position in response to the show cause notice from the Central Consumer Protection Authority. The company confirms that 99.1% of the 10,644 complaints received from CCPA were resolved to complete customer satisfaction. "The company has provided the requested information and clarifications in response to the show cause notice issued by Central Consumer Protection Authority," Harish Abichandani, chief financial officer of Ola Electric, said in an exchange filing on Monday.
HCL Technologies: Stock to trade ex-dividend on Tuesday for its Rs 12 interim dividend that the company announced earlier this month.
Global Cues
Stocks in the Asia-Pacific region echoed losses on Wall Street as stocks took a slight pause after posting record weekly gains this year ahead of key earnings. The yield on the US Treasury rose by 11 basis points to 4.19%.
Australia's S&P ASX 200 was 95 points, or 1.13%, lower at 8,250, while the Japanese Nikkei 225 was up 40 points, or 0.10% at 38,989 as of 5:40 a.m.
Wall Street took a breather after recording its best rally last week. The S&P 500 and Dow Jones Industrial Average slipped 0.18% and 0.80%, respectively, while the Nasdaq Composite advanced 0.27%.
Tesla Inc. and Boeing Co.'s earnings will be closely watched this week as investors look for guidance after recent challenges in launches and production delays, respectively. Nearly 20% of the S&P 500 companies are scheduled to report their earnings this week.
Treasury yields spiked on Monday. This comes amid comments about a slower pace of interest-rate reductions by Federal Reserve Bank of Kansas City President Jeffrey Schmid.
Brent crude was trading 0.23% lower at $74.12 a barrel as of 6:00 a.m. IST. West Texas Intermediate was down 0.03% at $70.54.
Money Market
The Indian rupee closed little changed against the US dollar on Monday, likely due to the dollar selling by the Reserve Bank of India amid the continuous selling of domestic stocks by global funds.
The rupee closed flat at Rs 84.066 against the dollar, according to the Bloomberg data. The domestic currency had closed at Rs 84.07 against the greenback on Friday.
"The rupee was in a thin band of Rs 84.05-84.08 as FPI dollar purchases were offset by dollar sales from possibly the RBI," said Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP.
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