Trade Setup For July 22: Nifty Could See Temporary Pause In Upward Trend

The truncated yet eventful week started with a flurry of activity but ended on a more subdued note. Despite opening at a record high the Nifty 50 index slipped into the red and fell sharply later in the session. According to analysts, the index has formed a long bearish candle on daily charts and a shooting star candle formation on weekly charts signaling a temporary pause in the upward trend.

While the technical charts have turned the sentiment a little bit cautious, as long as the index remains below 24,855, a "sell-on-rise strategy" can be adopted for the benchmark index, according to Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Intermediates Ltd.

Despite a significant correction, "the index showed resilience by not dropping below the prior day’s low" and closing above the mark of 24,500 said Avdhut Bagkar Technical and Derivatives Analyst, StoxBox. He expects the index to maintain support in the range of 24500-24200 to sustain bullish momentum.

Investors are also cautious ahead of the Union Budget that will be presented by the Finance Minister on Tuesday. The budget will provide the next set of direction for the market. Earnings season will also pick up pace which will result in stock-specific actions, according to Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd.

"Also, as we approach the upcoming Budget week, it is important to note that the volatility index may experience an uptick. This is due to India VIX teetering on the edge of a consolidation breakout on the daily time frame leading up to the Budget week," said Osho Krishan, Senior Analyst - Technical & Derivatives, Angel One Ltd.

Bank Nifty on the other hand has been trading within the range of 52,800 and 52,000 levels for quite some time according to analysts. A breach on either side would decide the further direction of the trend, said Vaishali Parekh Vice President, Technical Research at Prabhudas Lilladher Pvt. Ltd.

According to Parekh, the next support will be at 51,000, while the Nifty Bank index will be in the weekly range of 51,000 and 53,700.

GIFT Nifty was trading 21.5 points, or 0.09%, higher at 24,441.5 as of 06:45 a.m.

The Nifty July futures are down 1.13% to 24,529.1 at a discount of 1.8 points, with open interest down 6.22%.

Nifty Bank July futures are down by 0.8% to 52,270.65 at a premium of 5 points, while its open interest is down by 5.97%.

The open interest distribution for the Nifty 50 July 25 expiry series indicated most activity at 25,500 call strikes, with 23,500 put strikes having maximum open interest.

For the Bank Nifty options July 24 expiry, the maximum call open interest was at 56,000 and the maximum put open interest was at 52,000.

Overseas investors remained net buyers of Indian equities for the fifth consecutive session on Friday. Foreign portfolio investors mopped up stocks worth Rs 1,506 crore, according to provisional data from the National Stock Exchange.

Domestic institutional investors stayed net sellers for the fifth session and sold equities worth Rs 462 crore, the NSE data showed.

India's benchmark stock indices declined on Friday, weighed down by Reliance Industries Ltd. and Tata Steel Ltd. However, shortly after opening, the NSE Nifty 50 had risen 0.22% to a life high of 24,854.80., led by gains in Tata Consultancy Services Ltd. and Infosys Ltd.

Gains in the Nifty 50 and BSE Sensex were led by Infosys Ltd. and ITC Ltd. on Friday.

The NSE Nifty 50 ended 275.25 points, or 1.11% lower at 24,800.85, and the S&P BSE Sensex settled down 738.81 points, or 0.91%, to 81,343.46.

Broader markets underperformed benchmark indices. The S&P BSE Midcap and Smallcap indices were 2.31% and 2.22% lower, respectively.

On BSE, all 20 sectors ended lower, with the S&P BSE Metal emerging as the worst performing sector.

Market breadth was skewed in the favour of sellers. Around 3,005 stocks declined, 906 stocks advanced, and 90 stocks remained unchanged on BSE.

• Kotak Mahindra Bank: The private lender's standalone net profit rose 81% year-on-year to Rs 6,249 crore in April-June period. Net interest income, or core income, rose 9.7% year-on-year to Rs 6,843 crore. Besides, the lender's Chief Executive Officer Ashok Vaswani said that the lender is seeing some signs of stress in the credit cards segment with delinquencies.

• HDFC Bank: India's largest lender saw its Q1 net profit fall 2% quarter-on-quarter on lower core income growth and higher tax expenses. Besides, the lender's board provided an in-principle approval to initiate the process of listing of HDB Financial Services Ltd. via an initial public offering.

• YES Bank: The private lender's standalone net profit increased 46.4% year-on-year to Rs 502.4 crore for the quarter-ended June 30. .

• Reliance Industries: Net profit for the quarter was down 17.9% at Rs 17,445 crore while the revenue was down 1.9% at Rs 2.31 lakh crore against the previous quarter.

• Wipro: The IT major reported a 6.3% rise in net profit at Rs 3,037 crore, while its revenue was down 1% at Rs 21,964 crore against the previous quarter.

• Vedanta: The company raised Rs 8,500 crore via QIP at a floor price of Rs 440 per share.

• JSW Infra: The company approved purchase of assets under construction at 30 MTPA slurry pipeline project in Odisha's Nuagaon mines from JSW Utkal Steel for Rs 1,700 crore. It also entered into a 20-year agreement at a cost of Rs 1,324 crore per annum for transport of iron ore slurry from Nuagaon to Jagatsinghpur.

• IndusInd Bank: The company approved raising up to Rs 20,000 crore via debt securities on a private placement basis, and another Rs 10,000 crore via ADRs, GDRs or QIP.

• IRCTC: The government upgraded the company to 'Schedule A' central public sector enterprise from 'Schedule B'.

• Vodafone Idea: The company approved third tranche allotment of shares worth Rs 614.5 crore to Nokia India and Ericsson India. The shares to be allotted at an issue price of Rs 14.80 per share.

• EMS: The company received order worth Rs 140 crore from Uttarakhand Power Corp for development of distribution infrastructure-loss reduction works in Uttarakhand. The company’s JV received Rs 535 crore order from Uttarakhand Urban Sector Development Agency for development of water supply and sewerage system in Dehradun.

• Techno Electric & Engineering: The company raised Rs 1,200 crore via QIP at a floor price of Rs 1,440 per share.

Asia-Pacific stocks plunged in early trade on Monday after US President Joe Biden pulled out of the reelection campaign, causing another bout of volatility in the 2024 presidential race.

Equity benchmarks in South Korea and Japan fell over 1%, while those in Australia were trading marginally lower. The Nikkei 225 was 450 points or 1.13% lower at 39,626, while the S&P ASX 200 was 53 points or 0.68% down at 7,917 as of 06:29 a.m.

Biden, 81, on Sunday, announced that he will drop out from the Presidential race after mounting pressure from Democrats and endorsed Vice President Kamala Harris to become the Democratic nominee.

“While it has been my intention to seek reelection, I believe it is in the best interest of my party and the country for me to stand down and focus solely on fulfilling my duties as president for the remainder of my term,” Biden said in a statement on X.

Meanwhile, stock on Wall Street ended the week lower ahead of the earnings of big technology giants like Tesla Inc. and Alphabet Inc. The scrip of CrowdStrike Holdings Inc. tumbled as much as 15% before paring losses after an update in its platform caused a global outage in all Microsoft systems.

The S&P 500 Index and Nasdaq Composite declined 0.71% and 0.81%, respectively as of Friday. Dow Jones Industrial Average fell 0.93%.

Brent crude was trading 0.53% higher at $83.07 a barrel. Gold was 0.24% up at $2,406.71 an ounce.

• U.S. Dollar Index at 104.26

• U.S. 10-year bond yield at 4.22%

• Brent crude up 0.53% at $83.07 per barrel

• Bitcoin was up 0.85% at $68,321

• Gold spot was up 0.24% at $2,406.71

The Indian rupee ended flat at a record closing low on Friday amid steady crude oil prices, even as the Reserve Bank of India remained focused on controlling inflation as per its latest commentary.

The local currency closed flat at Rs 83.66 after having opened at Rs 83.63 against the greenback, according to Bloomberg. It had closed at Rs 83.66 on Thursday.