Trade Setup For Oct. 16: Nifty Forms Dark Cloud Cover, Support Seen At 25,000-25,250
Analysts advise caution, since a breach of key support levels could lead to further downside in the near future.
Description: Currency exchange data charts
(Source: Envato)
Nifty formed a 'bearish engulfing candle' on Tuesday, indicating a potential trend reversal. This means that sellers are now in control. The short-term market outlook remains non-directional, analysts said, with range-bound activity expected to persist in the near future.
Analysts advise caution, since a breach of key support levels could lead to further downside in the near future.
"Fresh buying should only be considered if the index provides a strong closing above the 25,250 level, confirming a potential recovery. On the downside, immediate support is placed at 25,000, followed by 24,900. A break below these levels could intensify selling pressure, dragging the index towards the 24,700–24,500 range," said Hardik Matalia, derivative analyst at Choice Equity Broking Pvt.
Traders should closely monitor critical levels, with 25,250 acting as a major resistance, according to Matalai, potentially capping any short-term recovery attempts.
"Traders seem to be waiting for a catalyst, and only a breakout from this range might revive momentum. Until then, a strategy of buying on dips and booking profits at higher levels remains prudent. Focus should also remain on stock-specific trades, as they offer better opportunities," said Rajesh Bhosale, technical analyst of equity at Angel One.
Analysts believe that 25,000 and 81,500 would be the immediate support zones for Nifty and Sensex, respectively, for day traders.
"Above the same, we could see one quick pullback rally till 25,200-25,250 and 82,300-82,500. On the flip side, below 25,000 and 81,500, the market (Nifty and Sensex) could retest the level of 24920-24900 and 81,000-80,700," said Shrikant Chouhan, head of equity research at Kotak Securities.
F&O Action
The Nifty October futures are up 0.36% to 25,118 at a premium of 61 points, with the open interest up by 0.82%.
The Nifty Bank October futures are up by 0.2% to 52,106 at a premium of 200 points, while its open interest is up 0.17%.
The open interest distribution for the Nifty 50 Oct. 17 expiry series indicated most activity at 25,200 call strikes, with 25,000 put strikes having maximum open interest.
For the Bank Nifty options expiry on Oct. 16, the maximum call open interest was at 52,000 and the maximum put open interest was at 51,000.
FII/DII Activity
Overseas investors, commonly known as foreign portfolio investors, remained net sellers of Indian equities for the 12th consecutive session on Tuesday, while domestic institutional investors stayed net buyers for the 16th consecutive session.
The FPIs offloaded stocks worth Rs 1,748.7 crore, according to provisional data from the National Stock Exchange. Domestic institutional investors bought stocks worth approximately Rs 1,655 crore.
Market Recap
India's benchmark stock indices ended lower on Tuesday, tracking the losses in index heavyweight Reliance Industries Ltd. after it reported lower than expected profit in the September quarter. RIL contributed 37.36 points of the 65-point fall in the Nifty 50.
Nifty ended 0.28% or 70.60 points, lower at 25,057.35 and Sensex closed 0.19% or 152.93 points, down at 81,820.12. Intraday, Nifty fell 0.5% and Sensex fell 0.4%.
Major Stocks In News
PNC Infratech: The firm bagged two letters of acceptance from the Maharashtra State Road Development Corp. for contracts worth Rs 4,630 crore. The first order of the value of Rs 2,268 crore includes construction of the access-controlled Pune Ring Road in Pune district. Package PRR E2 will extend 13.8 km from Indori to Chimbali in the Mawal and Khed regions of Maharashtra. The second contract worth Rs 2,362 crore involves constructing an access-controlled expressway connector to the Hindu Hrudaysamrat Balasaheb Thackeray Maharashtra Samruddhi Mahamarg, spanning from Jalna to Nanded in Maharashtra.
G R Infraprojects: The firm received a letter of acceptance on Monday for the construction of access-controlled Pune Ring Road in Pune District Package PRR W5 from village Kalyan/Rathwade Km. to village Shivare/Kusgaon Phase Km. in the State of Maharashtra on EPC Mode. The contract price was negotiated to 1885.63 from an initial contract price of Rs. 1997.07 crore. This will be done from the engineering, procurement and construction modes. It is to be completed 36 months from the appointed date.
Cochin Shipyard: The Ministry of Ports, Shipping and Waterways plans to sell a 5% stake in Cochin Shipyard via an offer-for-sale.
The offer is set to open on Oct. 16 and close on Oct. 17, with the floor price set at Rs 1,540 per share. The government will sell up to 65.77 lakh equity shares as the promoter of Cochin Shipyard, with a face value of Rs 5 each for a base offer of 2.5%.
Global Cues
Stocks in the Asia-Pacific region tumbled in early trade as weakness in Wall Street's technology companies, with disappointing outlooks and tighter US curbs on chip sales, hit sentiments.
South Korean benchmark Kospi was 30 points, or 1.15% lower at 2,603, while the Japanese Nikkei 225 was down 832 points, or 2.16%, at 39,099 as of 5:42 a.m.
The plunge in Asian stocks follows a slump in Wall Street's technology companies after the semiconductor bellwether ASML suffered its worst day since 1998.
Bloomberg reported that the company booked only about half the orders analysts expected from chipmakers, showing signs of weakness in the industry. This fueled a selloff in chip-related stocks.
The sentiment in the tech space was further dampened by concerns of capping sales of AI chips from US companies, which could potentially hurt the top line. It sets a ceiling on export licenses for certain countries in the interest of national security, Bloomberg reported quoting people familiar with the matter.
The S&P 500 and Nasdaq Composite slipped 0.76% and 1.01%, respectively, while the Dow Jones Industrial Average fell 0.75%.
Key Levels
US Dollar Index at 103.25
US 10-year bond yield at 4.04%.
Brent crude up 0.59% at $74.69 per barrel.
Bitcoin was up 0.70% at $66,946.38
Gold spot was down 0.09% at $2,660.13
Money Market
The Indian rupee closed stronger against the dollar on Tuesday amid continued intervention by the Reserve Bank of India and easing foreign fund outflows from domestic bonds and equities.
The domestic currency strengthened by 2 paise to close at Rs 84.04 against the US dollar, according to Bloomberg data. The rupee closed at Rs 84.06 on Monday against the greenback.
