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Trade Setup | Things To Know Before Market Opening - 06 Sep 2023 Wednesday

Day trading guide for today: Domestic equity benchmarks Sensex and Nifty settled higher in the previous session for the third straight day amid positive domestic macroeconomic data. Domestically focused mid-caps and small-caps outperformed the blue-chips setting record highs.

The 30-share BSE Sensex ended higher by 152.12 points or 0.23 per cent at 65,780.26 level on Tuesday, September 5, while the Nifty also closed at 19,574.90 level, up 46.10 points or 0.24 per cent. The benchmark Nifty 50 has added 1.67 per cent in the last three sessions after India's first-quarter gross domestic product (GDP) grew at 7.8 per cent, the fastest pace in a year.

The Nifty Midcap 100 index gained a per cent to hit an all-time high, riding past 40,000-mark on Tuesday led by a strong bullish momentum in midcap stocks. The Nifty Smallcap 100 index has increased by more than 30 per cent, while the Nifty Midcap 100 index has increased by more than 27 per cent so far this year. Both indices have performed much better than the benchmark Nifty, which has increased by 8 per cent during the same time period.

While Sun Pharma and ITC emerged among the top gainers, heavyweights Maruti Suzuki and UltraTech Cement were the major drags. Ten of the 13 major sectoral indexes logged gains, with realty adding 1.06 per cent, and extending gains for the seventh consecutive session.

‘’Domestic equities closed positively for the third consecutive day led by optimistic domestic cues. Services PMI data came in strong at 60.1 for the month of August, boosting sentiments. Despite weak global markets, Nifty opened positive and traded in a narrow range to finally close with gains of 46 points (+0.2 per cent) at 19,575 levels,'' said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd.

‘’Except for auto and financials, all sectors gave positive return with media rallying more than 3 per cent while Healthcare gained 1.6 per cent. Going ahead, market would continue trading in a broader range with positive bias as resilient domestic economy provides strength, amidst uncertain global cues,'' added Khemka.

On the outlook for Nifty, Ajit Mishra, SVP - Technical Research, Religare Broking observes that the index has reached closer to the resistance of 19,650 and needs participation from banking to surpass the same. 

‘’We feel traders should maintain caution in stock selection citing overbought indications, especially in midcap and smallcap space,'' said Mishra.

Rupak De, Senior Technical Analyst at LKP Securities adds, ‘’The trend will remain favorable as long as the bulls can maintain Nifty above 19,440. A "buy on dips" strategy should be the preferred approach until Nifty falls below 19,440. Resistance on the upper end is positioned at 19,600, and if breached, the index could potentially move higher."

On the outlook for Bank Nifty, Kunal Shah, Senior Technical & Derivative analyst at LKP Securities observes that the index is currently consolidating within a defined range, with support at 44,500 and resistance at 44,650.

‘’Despite the consolidation, a bullish undertone is observed, and traders are encouraged to consider buying on dips, with strong support around 44,300-44,200. A breakout above 44,700 could lead to further upside moves, especially towards the 45,000 level where significant open interest is seen on call options,'' said Shah.

Global equities mostly fell on Tuesday as higher Treasury yields weighed on growth stocks, while a slow pace of expansion in services activity in China raised concerns over demand in the world's second-largest economy.

Benchmark Brent crude traded over $90 a barrel after Saudi Arabia and Russia said Tuesday that it would extend its voluntary production cut of 1.3 million barrels of oil per day through the end of the year (December).

According to a statement released by the official Saudi Press Agency, the head of the Organisation of Petroleum Exporting Countries (OPEC) would continue the reduction of 1 million barrels per day (bpd)through December.

In an separate announcement from Deputy Prime Minister Alexander Novak stated that Russia's 300,000 bpd export cut will remain in effect for the same time frame, according to reports.

Foreign institutional investors (FIIs) extended their selling spree on Tuesday, even as domestic benchmark equity indices Sensex and Nifty settled higher on macro cues. As per the NSE data, FIIs cumulatively bought 8,414.44 crore of Indian equities, while they sold 10,139.55 crore --- resulting in an outflow of 1,725 crore. Meanwhile, DIIs infused 8,580.69 crore and offloaded 7,502.83 crore, registering an inflow of 1,077.86 crore.

F&O Ban List

BHEL, F&O ban list by the stock exchange for Wednesday.

The securities have been put on ban under the F&O segment as they have crossed 95 per cent of the market-wide position limit (MWPL), according to the NSE. However, the stocks will be available for trading in the cash market.

On intraday stocks for today, stock market experts — Sumeet Bagadia, Executive Director at Choice Broking, Pravesh Gour, Senior Technical Analyst, Swastika Investmart Ltd, and Rupak De, Senior Technical Analyst at LKP Securities— recommended six stocks to buy today.

1.JSW Steel: Buy JSW Steel at 815.95 with a stoploss of 795 at a target price of 850

JSW Steel has corrected from the all-time high levels of 835 levels but has bounced from the initial support of 800 levels which is also close to 20 Day EMA levels. Currently, the stock is trading around 815.95 levels. The stock is trading above all important moving averages indicating strength. The correction was from the upper band of the Bollinger band and also the bounce back is from the middle band which indicates strength. 

2.United Breweries (UBL): Buy UBL at 1,587 with a stoploss of 1,555 at a target price of 1,630

Considering the technical analysis of UBL India, it appears to be an attractive opportunity for investment. The stock, currently trading at 1,587, has demonstrated robust support around the 1,508 mark and has rebounded convincingly from those levels. 

The Relative Strength Index (RSI), a key momentum indicator, stands at a healthy 61 and is displaying an upward trend. Furthermore, UBL is trading comfortably above its 20-day, 50-day, 100-day, and 200-day Exponential Moving Averages (EMAs), indicating overall strength in its price action. Notably, it has breached the middle Bollinger Band, signifying potential bullish momentum.

Given these technical factors, initiating a long position in UBL at 1,587 with a target price of 1,630 seems to be a well-founded decision. To manage risk, a stop-loss order at 1,555 can be implemented, which provides a prudent risk-reward ratio.

3.Bikaji Foods International: Buy Bikaji at 512 with a stoploss of 492 at a target price of 544
It has witnessed a breakout of the triangle formation with strong volume. It has retested its previous breakout level at 460 and starts a new leg of the rally towards Rs. 540+.

4.Jain Irrigation Systems: Buy JISLJALEQS at 66.75 with a stoploss of 63.50 at a target price of 74
The counter has formed a base at Rs. 61.50 levels and has given a breakout of a flag formation with huge volume.

5.Tech Mahindra: Buy Tech Mahindra at 1,257 with a stoploss of 1,224 at a target price of 1,320
Tech Mahindra has recorded a breakout to a swing high on the daily chart, aligning with the bullish trend in the IT sector. Furthermore, the stock has risen above the 21-day EMA on the daily timeframe. 

A potential positive crossover in the RSI could further bolster the positive momentum in the stock. On the upside, the stock may advance towards 1,320. On the downside, there is support at 1,224.

6.CreditAccess Grameen Ltd: Buy CreditACC at 1,464 with a stoploss of 1,400 at a target price of 1,570
The stock has broken out from a consolidation phase with a sharp surge in trading volumes, indicating strong buying interest. The momentum indicator RSI has provided a positive crossover, confirming the shift in momentum towards the bullish side. 

The stock has a support level at 1,400, which is likely to act as a cushion for the bulls in case of any price retracement. With this breakout and positive momentum, the stock has the potential to reach upside targets of 1,530 and 1,570.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of PickStock. We advise investors to check with certified experts before taking any investment decisions.