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Trade Setup | Things To Know Before Market Opening - 17 Jan 2024 Wednesday

Day trading guide for today: Domestic equity benchmarks Sensex and Nifty 50 snapped their five-day winning streak in the previous session on profit booking in shares of select heavyweights, including Reliance Industries, Infosys, TCS and HCL Tech amid weak global cues.

The domestic market spent most of the day in negative territory on January 16, but it experienced a brief upswing during the session, pushing the benchmarks to achieve new record highs. However, the indices erased all gains upon closing.

Nifty 50 closed 65 points, or 0.29 per cent, lower at 22,032.30 after hitting a fresh record high of 22,124.15 during the session. The 30-share pack Sensex also touched its record high of 73,427.59 but settled at 73,128.77, down 199 points, or 0.27 per cent.

Nifty IT snapped its two-day winning run to close with a loss of 1.28 per cent. Sector-wise it was a mixed bag with buying seen in Metal and FMCG. Metals were in focus after reports suggested China is considering a fresh stimulus of $139 billion through debt issuance under a special sovereign bond plan. Overall, analysts expect the market to consolidate in higher zones.

On the outlook for Nifty today, Ajit Mishra, SVP - Technical Research, Religare Broking Ltd said, “Indications are in favor of further consolidation in the index and expect Nifty to hold the 21,750-21,900 zone. However, traders should maintain extra caution in stock selection now citing volatility due to earnings."

“Besides, the current positioning of the midcap and smallcap index is not reflecting the correct picture of deterioration in the broader trend so plan trades accordingly," added Mishra.

On the technical front, Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities said, “For a sustained upward movement towards 22,300 levels, the index needs to decisively break above the 22,150 mark. On the downside, the immediate support is located at 21,950, and a clear break below this level could trigger further corrections towards the 21,800 mark."

On the outlook for Bank Nifty, Kunal Shah said, “To witness a continuation of the rally towards 49,000/50,000, the index must sustain above the crucial level of 48,300. Conversely, the immediate lower-end support lies in the 47,800-47,700 zone, and a conclusive break below this level could pave the way for further downside movements."

Also Read: Smallcap IT stock locked at 5% upper circuit to hit 52-week high after net profit rises 44% in Q3FY24; do you own?

Speaking on Nifty Call Put Option data, Chinmay Barve, Head of Technical and Derivative Research at Profitmart Securities said, “One of the major total Call open interest was seen at 22,100 and 22,200 strikes with total open interest of 1,64,999 and 1,46,801 contracts respectively. Major Call open interest addition was seen at 22,100 and 22,200 strikes which added 87,705 and 50,785 contracts respectively in open interest."

“One of the major total Put open interest was seen at 22,000 and 21,800 strikes with total open interest of 1,54,402 and 1,27,218 contracts respectively. Major Put open interest addition was seen at 21,900 strike which added 11,692 contracts in open interest while 21,700 strike saw reduction by 13,523 contracts in open interest.," he added.

Also Read: HDFC Bank Q3 Results Highlights: Net profit rises 33% to 16,372 crore, NII up 24% YoY

Speaking on Bank Nifty Call Put Option data, Barve said, “One of the major total Call open interest was seen at 48,200 and 48,300 strikes with total open interest of 1,91,798 and 2,11,787 contracts respectively in open interest. One of the major Call open interest addition was seen at 48,300 strike which added 1,32,215 contracts in open interest."

“One of the major total Put open interest was seen at 48,100 and 48,000 strikes with total open interest of 1,26,143 and 1,89,435 contracts respectively. One of the major Put open interest addition was seen at 48,000 strike which added 29,167 contracts in open interest."

The US dollar index rose 0.8% to a more than one-month high, making bullion less attractive for other currency holders, while yields on the benchmark US 10-year Treasury notes climbed above four per cent in the previous session, as markets wait to hear remarks from several Federal Reserve officials this week to further gauge the central bank's monetary policy path.

The European Central Bank (ECB) policymaker Joachim Nagel said on Monday that it is too early for the ECB to discuss cutting interest rates because inflation remains high. Austrian central bank governor Robert Holzmann warned not to bank on a cut at all this year.

Even though analysts have been warning about uncertainty on interest rate trajectory due to inflation being higher than central banks' targets, the market is already considering the possibility of rate cuts this year. Some analysts suggest that if rate cuts happen, they might not be significant but rather modest.

European shares fell on Tuesday with the benchmark STOXX 600 declining 0.6 per cent. Britain’s FTSE 100 edged down 0.4 per cent at 7,564.71. France’s CAC 40 lost 0.4 per cent at 7,381.15. Germany’s DAX falls 0.7 per cent at 16,514.72.

In Asian stock markets, Hong Kong’s Hang Seng Index dropped 2.2 per cent to 15,865.92. China's Shanghai Composite rose 0.3 per cent to 2,893.99. Japan’s Nikkei 225 edged down 0.8 per cent to 35,619.18.

Oil prices edged lower on Tuesday, with the US benchmark down over one per cent, as cooling expectations of interest rate cuts pushed the dollar to a one-month high. US West Texas Intermediate crude futures fell 65 cents, or 0.9 per cent, from Friday's settlement to $72.03 a barrel. Brent Crude futures fell 24 cents, or 0.3 per cent, from Monday's settlement to $77.91 a barrel. 

Shares of HDFC Bank, ICICI Securities, ICICI Lombard General Insurance Company, TV18 Broadcast are some of the stocks which will remain in focus during today's session as these companies announced their October-December quarter results for fiscal 2023-24 (Q3FY24) post-market hours on Tuesday.

Additionally, shares of Asian Paints, ICICI Prudential Life Insurance Company, IIFL Finance, LTIMindtree Ltd, Som Distilleries and Breweries will also be in focus as these firms will release their Q3FY24 results today.

F&O Ban List

A total of 15 stocks - Aditya Birla Fashion and Retail, Zee Entertainment Enterprises Ltd, have been put under the ban for trade on Wednesday, January 17, under the futures and options (F&O) segment by the National Stock Exchange (NSE). No fresh positions are allowed for any of the F&O contracts in the particular stock when placed under the F&O ban period by the stock exchanges.

Also Read: Wipro ADR down 8% on NYSE days after Q3FY24 results; Net profit fell 12%, revenue down across segments

On intraday stocks for today, stock market experts — Ganesh Dongre, Senior Manager - Technical Research at Anand Rathi, Sumeet Bagadia, Executive Director at Choice Broking, and Virat Jagad, Technical Analyst at Bonanza Portfolio —recommended six stocks to buy today.

1. Westlife Foodworld Ltd: Buy Westlife Foodworld in cash at 867.9 with a stop loss of 854 at a target price of 901.

Westlife Foodworld daily chart indicates a significant shift in market dynamics, transitioning from a period of slight declines and sideways consolidation to a promising upward movement. The current trading session shows an upward momentum, breaking out of a narrow range and forming a double bottom pattern on the daily chart. 

Any up move above 870 could potentially signal a breakout to the upside. This development aligns with a positive short-term trend, supported by a notable increase in trading volume.

Key technical indicators, including the Relative Strength Index (RSI), highlight the stock's positive momentum. The RSI not only displays positive signals but also shows the stock trading above crucial moving averages—specifically, the 20-day, 50-day, and 100-day Exponential Moving Averages (EMA). This convergence suggests a sustained strength in Westlife price action.

Volume analysis further supports the credibility of the upward movement, with a significant increase accompanying the positive trend. A comprehensive evaluation of Westlife daily chart implies the existence of a broader bullish pattern in the stock price. 

This, in turn, presents an appealing long trading opportunity for investors looking to capitalize on the expected upward trajectory. Based on the above analysis, we recommend purchasing Westlife in cash at the current market price of 867.9, with a target of 901 and a stop loss set at 854.

2. Pidilite Industries: Buy Pidilite Industries in cash at 2,795.55 with a stop loss of 2,766 at a target price of 2,843

Pidilite Industries has recently exhibited a robust breakout from the critical resistance zone of 2,735-2,790 on the daily chart, consolidating the move with higher highs and higher lows. This breakout is supported by a notable increase in trading volume, indicating strong bullish sentiment.

Key technical indicators, particularly the Relative Strength Index (RSI), emphasize the stock's positive momentum. The RSI not only signals positive trends but also aligns with the stock trading above crucial moving averages, including the 20-day, 50-day, and 200-day Exponential Moving Averages (EMA). This convergence underscores the sustained strength in Pidilite Industries price action.

In summary, the decisive breakout, coupled with favourable volume and a positive alignment of key technical indicators, suggests a bullish outlook for Pidilite Industries. Traders and investors may find this analysis indicative of potential continued upward momentum in the stock.

Based on the above analysis we recommend buying Pidilite Industries in cash at CMP of 2,795.55 for the target of 2,766 with a stop loss of 2,843.

3. Tata Steel: Buy Tata Steel at 137.50 with a stoploss of 132 at a target price of 143

In the short-term trend, the stock has a bullish reversal pattern, technically retrenchment could be possible till 143 so, holding the support level of 137.50 this stock can bounce toward the 143 level in the short term, so the trader can go long with a stop loss of 143 for the target price of 137.50

4. Asian Paints: Buy Asian Paints at 3,295 with a stop loss of 3,240 at a target price of 3,400

On the short-term chart, The stock has shown a bullish reversal pattern, so holding the support level of 3,240. this stock can bounce toward the 3,400 level in the short term, so the trader can go long with a stop loss of 3,240 for the target price of 3,400.

5. IDBI Bank: BUY | Buying range: 2,195-2,200 | Target 2,270 | Stop Loss 2,141

A significant breakout of a Descending Triangle pattern in IDBI Bank has been observed. The burst in volume during the current week suggests increased buying interest at the current price levels, which further reinforces the positive outlook for security. Moreover, the price of security is trading above the major Exponential Moving Averages (EMA's), indicating a sustained uptrend. This alignment with the EMA's adds more confidence to the bullish scenario. The RSI confirms the positivity as it took a breakout of the falling trend line.

6. JM Financial Ltd: BUY | Buying range: 107-108| Target 112 | Stop Loss 105|

On a Daily time frame JM Financial Ltd has given a breakout of Symmetric Triangle Pattern on the upside, indicating a positive trend in the stock. Buyers have to look more attractive to buy the security above 400 levels. The Fast (9) EMA trading above the Slow (14) EMA indicating a positive trend with price trading above both the EMA indicates strength on the upside. In addition to this the MACD is showing positive crossover, which confirms the buying interest. The volume after the breakout is high, suggesting demand for security.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of PickStock. We advise investors to check with certified experts before taking any investment decisions.