New Year’s day was just turning out to be the perfect start to 2024 that Indian equities were hoping for, continuing from where they left off in 2023. The Nifty even made a new record high of 21,834. However, the index saw a steep fall soon after from the record levels, with provisional closing even taking place below the key level of 21,700. However, after final adjustments, the Nifty 50 did manage to hold on to that level.
Nearly all of the index heavyweights – HDFC Bank, Reliance Industries, Axis Bank, TCS saw a fall from the day’s high, which took the index lower.
The broader markets though, continue to remain in a league of their own. The Midcap index, at one point was up 1%, but ended 0.6% higher, in-line with the broader sell-off seen during the final minutes of trade. PSUs continued to dominate with REC and PFC extending their gains after a 250% rally in 2023.
“Last five years, earnings has grown by 15%. Debt is also looking very good because you’re looking at lower rates in the coming two, three years. And even US Fed has paused. So if you ask me, this is the year where people should just stick to their core asset allocation and keep it very simple,” said Ashish Shanker, MD & CEO of Motilal Oswal Private Wealth.
“There are pockets of excess valuations, there are pockets of exuberance. But I have never seen such a perfect setup ever. Even in the bull run of 2003 to 2007 or 2002 to 2007, we had six years of positive returns. This is the eighth consecutive year of positive returns. So it’s a tough one. But I will say this is a year to stick to basics,” he added.
Foreign investors were sellers in the cash market on Monday, while domestic investors were net buyers, although overall volumes remained low.
The Nifty is starting to exhibit high volatility around the new highs which signals chances of another round of downward correction, said Nagaraj Shetti of HDFC Securities. A decisive move above 21,850 will nullify the present bearish effect which can open more upside in the near term, he said. Immediate support is at 21,550.
Shrikant Chouhan of Kotak Securities expects the weakness to persist as long as the index remains below 21,800, owing to which it can fall back towards levels of 21,650 – 21,600. On the upside, a sustained move above 21,800 can take the index towards 21,900. He advises contra traders to take a long bet near 21,600 levels with a 30-point stop loss.
A decisive fall below 21,650 may call for a directional fall in the market, said Rupak De of LKP Securities. For the index to move higher, De expects a decisive close above 21,750 levels.
Before the sell-off in the last few minutes of trade, the Nifty Bank was making a dash towards the 48,500 mark before witnessing a 200-point correction. However, the index managed to shut shop above the 48,000 mark, but remains 400-points away from its previous record high of 48,636.
LKP’s De said that the sentiment on the Nifty Bank may remain weak over the short-term but immediate support is placed at 48,000 where put writers are heavily present. However, a decisive fall below 48,000 may take the index towards 47,700 – 47,500. On the upside, 48,300 remains a key resistance zone and fresh upside is possible only above those levels.
The Nifty Bank is facing resistance at the upper bollinger band, which is placed between 48,600 – 48,700. The 21-Day Moving Average support for the index is at 47,500, said Om Mehra of SAMCO Securities. He expects the index to move with larger swings in the coming trading sessions.
What Are the F&O Cues Indicating?
Nifty 50’s January futures shed 1.3% and 1.68 lakh shares in Open Interest on Monday. They are now trading at a premium of 147 points from 154.55 points earlier. On the other hand, Nifty Bank’s January futures shed 1.2% and 25,530 shares in Open Interest. Nifty 50’s Put-Call Ratio is now at 1.13 from 1.11 earlier.
Balrampur Chini and Hindustan Copper are now in the F&O ban list from Tuesday’s trading session.
Nifty 50 on the Call side for January 4 expiry:
For this Thursday’s weekly options expiry, the Nifty 50 strikes between 21,700 and 21,900 have seen Open Interest addition. The 21,850 strike has seen the maximum Open Interest addition, indicating resistance at that level for the Nifty.
Strike | OI Change | Premium |
21,850 | 25.14 Lakh Added | 85.2 |
21,900 | 21.01 Lakh Added | 65.75 |
21,800 | 13.81 Lakh Added | 110.05 |
21,700 | 7.03 Lakh Added | 162.65 |
Nifty 50 on the Put side for January 4 expiry:
On the Put side the Nifty 50 strikes between 21,600 and 21,800 have seen Open Interest addition for this Thursday’s expiry
Strike | OI Change | Premium |
21,700 | 25.88 Lakh Added | 66.5 |
21,600 | 18.52 Lakh Added | 40.5 |
21,800 | 16.97 Lakh Added | 98.15 |
These stocks added fresh long positions on Monday, meaning an increase in both price and Open Interest:
Stock | Price Change | OI Change |
Delta Corp | 3.66% | 25.56% |
Gujarat Gas | 4.91% | 18.26% |
Zydus Life | 1.15% | 14.57% |
Balrampur Chini | 0.62% | 13.20% |
Granules India | 1.37% | 6.49% |
These stocks added fresh short positions on Monday, meaning a decrease in price but increase in Open Interest:
Stock | Price Change | OI Change |
Eicher Motors | -2.68% | 10.94% |
Abbott India | -0.40% | 9.87% |
Birlasoft | -2.73% | 7.50% |
Ramco Cements | -0.54% | 5.78% |
L&T Technology Services | -1.12% | 5.05% |
These are the stocks to watch out for ahead of Tuesday’s trading session:
What Are Global Markets Indicating?
Most Asian markets barring Japan will resume trading after the new year holiday. Japanese markets are shut till January 4.
Hang Seng futures are pointing towards a strong start to the new year, while Australian equities are trading lower.
US markets were shut overnight.
Official data showed that China’s factory activity contracted further in December, a sign that more policy support is needed to revive the economy.
First Published: Jan 1, 2024 7:00 PM IST
Omprakash Tiwary is a business writer who delves into the intricacies of the corporate world. With a focus on finance and economic landscape. He offers readers valuable insights into market trends, entrepreneurship, and economic developments.