Global cues may spoil Nifty’s party towards new highs

Barring Monday’s blip, the last week turned out to be a good one for the markets. The Nifty reported another weekly advance and has now oscillated between gains and losses for four weeks.

Another good bit is the fact that the Nifty closed above 22,000 for the first time in a month. The last time it did so was back on January 16. On the charts, it has also made higher highs over the last three sessions. Friday’s move has also put the index within 80 points off the February 2 high of 22,126.

Here’s another positive aspect for the Nifty last week. Through nearly all of January and most of this February series, the index made intraday highs and struggled to sustain them on most instances. In the week gone by, the Nifty, barring Monday, has mostly closed in and around the highest point of the day.

Moving on to the not-so-good bit, which is a weak handover from Wall Street, where benchmark indices snapped a five-week gaining streak. Well, only par for the course that after a five-week rally, the law of averages would eventually catch up. But the reason for the fall would not please the street.

Another hot inflation report on Friday sent stocks tumbling on Wall Street. The S&P 500 fell 0.5%, the Dow fell 150 points, while the Nasdaq shed 0.8%. The tech-heavy index also underperformed for the week, ending 1.5% lower.

This has also put off any hops of a potential rate cut in March, but also stoked uncertainty that the rate cut may not arrive as early as anticipated too. It must be noted that a potential rate cut in March from the Fed was one of the factors behind this latest rally in global equities. However, Indian markets have shrugged off most global cues recently and focused mainly on domestic triggers for their moves.

As has been the case recently, both foreign and domestic investors were buyers in the cash market on Friday.

Nifty’s daily chart resembles an ascending triangle pattern and the breakout level is placed above the recent high of 22,127, said Ruchit Jain of 5paisa.com. “If that level is surpassed, the next target levels as per the pattern will be 22,500 and 23,000 – 23,100,” he said. On the downside, 21,925 and 21,800 are near-term supports, while a positional support is at the 40-Day Moving Average of 21,530.

Rajesh Bhosale of Angel One believes that it will be important to see the Nifty movement around the 22,100 – 21,50 mark. A move beyond this range can take the index towards 22,380 – 22,500 zones. He advises buying into dips but warns against complacency. Immediate support is at 21,950 and 21,800 with important support at 21,550 – 21,500.

There is still no sign of any significant reversal pattern building at the highs for the Nifty, said Nagaraj Shetti of HDFC Securities. He expects some more upside on the index towards 22,150 before any potential selling pressure. Immediate downside support is at 21,920.

The Nifty Bank has been the weaker among the two indices and also saw a bigger gash last Monday compared to the benchmark index. Since then, this index has also seen four days of gains, recovering over 1,750 points from Monday’s low of 44,633.

While this move proved that 44,500 is a key support for the Nifty Bank, what needs to be seen is whether it can sustain above the 46,500 mark, which it failed to do so on Friday, despite making an intraday high of 46,693. In fact, the Nifty Bank has not closed above 46,500 since January 20.

Amol Athawale of Kotak Securities believes that the short-term texture of the Nifty Bank is bullish. However, the 50-Day Simple Moving Average of 46,815 can act as a key resistance area and a break above that can take the index towards 47,300. He expects the traders to exit long positions in case the index slips below 45,900.

Any dips in the Nifty Bank should be used as buying oppportunities, according to Kunal Shah of LKP Securities. Although the index rejected the immediate hurdle of 46,700, the undertone, according to him, remains bullish. On crossing 46,700 on a closing basis, the index can move higher towards 48,000, he added.

What Are The F&O Cues Indicating?

These stocks added fresh long positions on Friday, meaning an increase in both price and Open Interest:

These stocks saw fresh short positions on Friday, meaning a decrease in price but increase in Open Interest:

These stocks saw short covering on Friday, meaning an increase in price but decline in Open Interest:

These stocks saw unwinding of long positions on Friday, meaning a decrease in both price and Open Interest:

These are the stocks to watch out for ahead of Monday’s trading session:

Balrampur Chini: Board approves foray into manufacturing Polylactic Acid to be used in the production of bioplastic. The move aligns with the company’s commitment to environmentally conscious practices and synergies with the existing buisness model. Board approves investment of ₹2,000 crore of which ₹800 crore will come from internal accruals and the rest via debt over a period of 2.5 years. The project is expected to be completed within 30 months.

Dr Reddy’s Laboratories: Sources tell CNBC-TV18 that the company plans on acquiring Novartis AG’s stake in Novartis India. It plans to acquire the domestic-focussed portfolio and may offer a controlling premium for the same. Dr Reddy’s said it does not comment on market speculations and there is no event yet that demands a disclosure. Novartis AG had launched a strategic review of its 70.68% stake in Novartis India on February 16 and told CNBC-TV18 that while a strategic review has been launched, there is no decision on the eventual outcome yet.

Quess Corp: Board has approved composite scheme of arrangement providing for the demerger of Quess Corp into three independent listed entities. The currently listed entity Quess Corp will focus on workforce management, the other, Digitide Solutions will focus on BPM solutions, Insurtech and HRO business, while the second new company Bluspring Enterprises will focus on facility management, industrial services and investments. Shareholders will get one share of each new company for every one share held of Quess Corp. The demerger is likely to take 12-15 months.

Paytm: Partners with Axis Bank for Escrow account to conitnue seamless merchant settlements. This arrangement will replace the nodal account which was earlier used with Paytm Payments Bank. One 97 Communications and Paytm Payments Services are also in discussion with other banks to evaluate a second partner for nodal / escrow services. The RBI has also made some partial modifications to the directions issued on January 31. No deposit or credit transaction to be allowed after March 15, while withdrawal and use of balance to be allowed without restrictions.

Titagarh Rail Systems: Has received an order from the Ministry of Defence for procurement of 250 specualised wagons for nearly ₹170 crore. The execution of the contract will start 12 months after signing of the contract and will be completed in 36 months.

Sula Vineyards: Virlinvest Asia PTE to sell its entire stake in the company via block deals. The offer price is said to be between ₹570 – ₹617.55 per share for the entire 8.34% stake. The deal size is said to be ₹435 crore.

Tata Power: Gets LoI from REC Power Development and Consultancy to acquire the Jalpura Khurja Power Transmission Ltd. for ₹838 crore.

Manappuram Finance: Files Addendum for its ₹1,500 crore IPO of Asirvad Microfinance with SEBI. The DRHP for the same was filed on October 5, 2023.

PB Fintech: IRDAI upgrade Policybazaar Insurance brokers license from direct insurance broker to a composite insurance broker.

Omaxe: Consortium led by the company has bagged a project worth ₹385 crore to build two bus terminals in Uttar Pradesh.

Laurus Labs: Infuses a sum of ₹99.13 crore into its wholly-owned subsidiary Laurus Synthesis Pvt. Ltd. on a rights issue basis, keeping in mind the funding requirements of the unit. 7,600 equity shares have been allotted to the parent on a rights issue basis.

Bhagiradha Chemicals: Board meet on March 5, 2024 to consider stock split.