Research Analyst II CA Mayank Singh Chandel

Nifty Analysis: Outlook for November 21, 2024

The Nifty 50 managed to close in positive territory on Tuesday, ending its eight-session losing streak. However, the index remained below the critical 200-day Exponential Moving Average (EMA) at 23,541, signaling continued caution. The recovery in the session was largely technical, driven by oversold conditions, as indicated by the Relative Strength Index (RSI), which stood at 28.6. Despite this bounce, the broader sentiment remains bearish unless the Nifty sustains above the 200-day EMA. A downside towards 23,200 remains a possibility, while 23,800 serves as a key resistance level.

Options Data Highlights:
Call Open Interest (OI): Highest at 24,000, followed by 24,500 and 23,800 strikes.
Put Open Interest (OI): Maximum at 23,000, followed by 22,500 and 22,000 strikes.
This data suggests that the Nifty may consolidate between 23,000 and 24,000 in the near term, with critical levels at the boundaries of this range.

Trade Setup for Thursday:
Upside Potential: Sustaining above 23,500 could lead to a pullback towards 23,800.
Downside Risk: A break below 23,500 may result in a decline to 23,200.

Traders are advised to watch these levels closely, as geopolitical developments and market sentiment will play a significant role in determining the next move.

NSE Revises Lot Sizes for Nifty and Other Index Derivatives (Effective November 20, 2024)

The National Stock Exchange (NSE) has announced changes to the lot sizes for Nifty and other index derivatives contracts. Here’s a summary of the revised lot sizes:

Index Old Lot Size New Lot Size
Nifty 50 25 75
Bank Nifty. 15 30
FinNifty 25 65
Midcap Nifty 50 120
Nifty Next 50 10 25

Key Points to Note:
New Contracts:

The revised lot sizes will apply to all new index derivatives contracts, including weekly, monthly, quarterly, and half-yearly contracts.

Existing Contracts:

Ongoing weekly and monthly contracts will retain their current lot sizes until they expire.
Quarterly and half-yearly contracts will transition to the new lot sizes on:
December 24, 2024 for Bank Nifty contracts.
December 26, 2024 for Nifty contracts.

IPO ALERT

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Min qty- 138

Our Analysis-

For Listing Gains:
Investors seeking short-term listing gains are advised not to apply for this IPO, as it may not yield significant immediate returns.

For Long-Term Investors:
Long-term investors should consider applying for this IPO, given the company’s robust renewable energy portfolio, strong promoter backing, and potential for growth in the renewable energy sector.

Trading on the NSE and BSE will be closed on November 20 due to the general assembly elections in Maharashtra, as per this month's holiday schedule.

Nifty Analysis for Tuesday, November 19, 2024

The Nifty 50 continued its downward spiral on November 18, marking its seventh consecutive session of losses and hitting a fresh five-month low. The index remains entrenched in a lower highs-lower lows formation, signaling a persistent bearish trend. Technical patterns, including the ongoing head-and-shoulders formation, suggest that the index may soon test the crucial support zone around 23,200, which aligns with the pattern’s second target.

Technical Indicators:
Despite the Relative Strength Index (RSI) dipping into oversold territory at 28.6, indicating the possibility of a short-term bounce, the broader bearish sentiment and selling pressure are likely to cap any meaningful upside.

Options Data Analysis:
Call Side Open Interest:
The highest OI is concentrated at the 24,000 strike, followed by the 24,500 and 23,500 levels, suggesting strong resistance in these zones.
Put Side Open Interest:
The maximum OI is observed at the 22,500 strike, with significant interest at 23,000 and 23,500, indicating key support levels.
Weekly options data highlights 23,000–23,200 as immediate support zones, while resistance lies between 23,500–23,700, reinforcing the likelihood of a limited rebound.

Trade Setup for Tuesday:
Downside Expectations:
Nifty is expected to move towards the 23,200 level, completing the second target of the head-and-shoulders pattern.
Short-Term Bounce:
A potential recovery, driven by oversold RSI levels, could push the index up to 23,700, though this is expected to be temporary.

Nifty Analysis for Thursday, 18th November 2024

Markets Continue Their Decline
The Nifty index extended its losing streak for the sixth straight session on Friday, closing 26 points lower at 23,533 (-0.11%). Market sentiment remains fragile due to three main factors: lackluster Q2 earnings, a strengthening U.S. dollar index, and consistent selling by foreign institutional investors (FIIs) over the past month and a half. Volatility continues to dominate, keeping traders and investors cautious.

Key Support Levels to Watch

The immediate support zone lies between 23,200 and 23,300. If this level is breached, Nifty could fall further towards the 23,000-22,900 range, signaling increased downside risk.
A critical long-term support area is at 21,200-21,300, which served as a key level during Election Day. This zone marked the starting point for Nifty's rally to its all-time high of 26,277. It is expected to act as a strong floor for the index if markets witness extended bearish momentum.

Trend Outlook and Trading Strategy
The Nifty is firmly entrenched in a "lower highs, lower lows" downtrend, indicating a bearish trajectory. Any rebound towards the 24,200-24,300 zone, which aligns with the 20-day exponential moving average (EMA) on the daily charts, could provide an opportunity for fresh short positions. Traders can consider keeping their stop-loss above 24,550, the last recorded lower high, to manage risk effectively.

Conclusion
With persistent volatility and macroeconomic pressures, Nifty’s near-term outlook remains bearish. Investors should remain cautious and monitor key support and resistance levels closely. Long-term investors might consider the 21,200-21,300 range as a potential accumulation zone, but only if broader market conditions stabilize. Short-term traders, on the other hand, may find opportunities in aligning their trades with the prevailing downtrend.

This technical outlook highlights the importance of adapting to evolving market conditions while carefully managing risk in a challenging environment.

Weekly Market Outlook Report "17th Nov 2024"

Dear Subscribers,

This week continued the theme of selling pressure, marked by volatility and a notable absence of recovery. Following a brief pause and a "dead cat bounce," markets witnessed fresh declines, driven by relentless FII selling, which was countered only partially by DII buying. However, amidst this turbulence, signs of value are emerging in several pockets. This is a crucial time to focus on businesses with strong earnings momentum and solid fundamentals.

The Q2FY25 earnings season remains in full swing, with over 1,200 companies having reported their results. While many are grappling with topline growth challenges, some bright spots have stood out. Notably, pharma companies, hotels, select chemical players, and BFSI names have delivered impressive performances.

Global Macro Factors 🌍
This week, global macro indicators leaned neutral with a negative bias:

Crude Oil: Marginally up by 0.61%, now trading around $72 per barrel.
Gold: Continued its decline, down 1.43%, trading at $2573.10.
Dollar Index: Rose significantly by 1.04%, reaching 106.62.
USD/INR: The rupee hit an all-time low of 84.39, with USD/INR up 0.1%.
US 10-Year Treasury Yield: Increased sharply to 4.46% from 4.29% last week, signaling a headwind for equity markets.
S&P 500: Declined by 1.92%, now trading below the 5900 mark.

Domestically, India's forex reserves fell for the sixth consecutive week, dropping $6.4 billion to $675.65 billion as of November 8. This is a notable decline after reserves previously crossed the $700 billion milestone.

Market Performance 📈
The carnage in equity markets deepened this week, with large-cap stocks falling sharply, and mid and small caps witnessing even steeper declines. FIIs continued their relentless selling spree, offloading equities on all trading days, while DIIs provided much-needed support by absorbing some of the pressure.

Nifty 50: Fell sharply by 2.55%, marking its third-largest weekly drop in two years.
Nifty 100 and Nifty 500: Declined by 2.55% and 3.01%, respectively.
Nifty Midcap 100: Dropped by 4.10%.
Nifty Smallcap 100: The hardest hit, down 4.58%.
The advance-decline ratio was highly bearish, reflecting broad-based weakness across sectors and indices.

Top Gainers of the Week

Infosys: Among Nifty 50, gained 3.44%.
Zomato: Led the Nifty 100 with a 5.68% rise.
ITI: Topped Nifty 500 and Smallcap 100 with a gain of 10.37%.
IHCL (Indian Hotels): Best performer in Midcap 100, up 8.42% after robust Q2 results.

Sector Analysis 📊
Sectoral indices painted a grim picture this week, with every major sector except Nifty IT ending in the red. Seven sectoral indices recorded declines exceeding 3%, reminiscent of the sharp corrections witnessed two weeks ago.

Top Losers:
Metal Index: Dropped 5.16%, leading the decline.
PSU Banks: Suffered heavy losses, ranking among the top three losers.
MNC Index: Also saw significant selling pressure.

Other Weak Sectors:
PSE, FMCG, and Auto faced sharp corrections, reflecting a challenging environment for broader markets.

Market Breadth:
The percentage of Nifty 500 stocks trading above their 50-day EMA fell dramatically to 16.60%, compared to 29.70% last week. A healthy range is considered between 40-70%, so this indicates oversold conditions in the market, potentially opening up opportunities for long-term investors.

Sectors to Watch
Looking ahead, keep a close watch on Metals, Banking (Private + PSU), IT, and Financial Services for potential opportunities as the market searches for stability.

That’s all for this week! Stay cautious, focus on fundamentals, and keep an eye on earnings momentum.

Happy Trading!
Mayank Singh Chandel
SEBI Registered Research Analyst

Nifty Analysis for November 14, 2024: Market Weakness Intensifies as Key Support Levels Break

The Nifty 50 is at a critical juncture after breaking below the neckline of a head-and-shoulders pattern on Wednesday, marking a fresh breakdown. The index fell below last week’s low near 23,816, sustaining below the 23,800 level amid heavy selling pressure. This move led Nifty to test its 200-day Exponential Moving Average (DEMA), positioned around 23,540, where it ultimately formed a bearish candlestick pattern, underscoring the negative market sentiment.

A decisive break below 23,500 would further accelerate the decline, potentially taking the index down to 23,300 as the next support level. The overall sentiment remains bearish, with limited signs of immediate recovery.

Options Data Analysis
According to open interest (OI) data:

On the Call side, the highest open interest was observed at the 23,700 and 23,600 strikes, suggesting strong resistance at these levels.
On the Put side, 23,500 holds the highest OI, with additional support seen at 23,400.
This positioning indicates that 23,500 is a critical support level, with the 23,700-23,600 range acting as significant resistance in the near term.

Trade Setup for Thursday

With Nifty currently resting near its 200 DEMA at 23,550, any pullback is likely to provide a selling opportunity. Traders can look to target 23,200 on the downside, while maintaining a stop loss above 23,750 to manage risk.

Nifty Analysis for November 13, 2024: Market Weakness Continues Amid Global Concerns

The Nifty 50 saw strong selling pressure today, falling to a new low due to weak global trends. The index dropped below last week’s closing, forming a long bearish candlestick, which suggests that sellers are in control. This is the fourth day in a row that Nifty has made lower lows, meaning it has been trending down consistently. Throughout the day, it failed to break above any previous highs, showing that buyers were unable to lift the index.

If the Nifty falls below the 23,800 level, we could see it drop further to 23,500—a key level aligned with the 200-day Exponential Moving Average (EMA). This line is often seen as a support level in technical analysis. If the index stays above 24,000, however, this level could act as immediate resistance, slowing down any upward move.

Option Data Insights
In the options market:
Calls: The most activity was at the 24,500, 25,000, and 24,200 strikes, making these strong levels of resistance.
Puts: The highest activity was at the 23,000, 23,500, and 24,000 levels, suggesting these are likely support levels.
This data shows 23,500 as the next major support level, while 24,000 to 24,200 could be a challenging zone for any rebound.

Trade Setup for Tomorrow
The trend remains weak, and if Nifty closes below 23,800, any slight bounce could be an opportunity to sell, keeping a stop-loss above 24,000 to manage risk. The overall view is to “sell on rise,” with 23,500 as the next target if selling continues.

Nifty Analysis for November 12, 2024: Key Levels Remain Crucial Amid Market Volatility

The Nifty 50 faced a volatile start to the week on November 11, ultimately closing flat with a slight negative bias. Throughout the session, the index held above the 24,000 mark—a critical level that could support an upward move toward the immediate resistance at 24,300 and a significant hurdle at 24,500. However, a breach below 24,000 would likely open the door for further downside, with 23,800 emerging as the next key support level.

Options Data Insight:
Weekly options data indicates strong resistance on the call side, with the highest open interest at the 25,000 strike, followed by 24,500 and 24,800. Notably, the 24,700 strike also saw significant call writing, suggesting that it too could act as resistance. On the put side, the 23,000 strike holds the highest open interest, followed by 23,500 and 24,000, establishing these as critical support zones. Further put writing at 23,700 and 23,600 also strengthens support levels below 24,000.

Trade Setup and Levels:
Nifty's trend remains choppy with a mildly negative bias. After the recent decline from upper resistance levels, an upside bounce could materialize if the index approaches the lower support near 23,800. In the short term, 24,300 stands as an important resistance to monitor.

Overall, traders are advised to remain cautious and look for opportunities within these key levels as Nifty navigates this consolidation phase.

Nifty Analysis for November 8, 2024: Market Consolidation Ahead as Key Levels Hold

As anticipated, Nifty followed a downside scenario on November 7, retesting the 24,200 level and closing just below it at 24,199. The index shed over 1%, erasing the previous session's gains and closing below its 20-, 50-, and 100-day Exponential Moving Averages (DEMAs) on higher-than-average volumes—a bearish signal. For bullish momentum to return, Nifty would need to close above these key moving averages. Until then, consolidation is expected in the coming sessions.

The psychological 24,000 level now stands as the next support, followed by the recent low at 23,800, which is crucial. On the upside, 24,500 remains a significant resistance level, creating a likely consolidation range between 23,800 and 24,500 in the near term.

Option Data Analysis

In the monthly options data:
Call Side: Maximum open interest is observed at the 25,000 strike, with notable resistance at 24,500.
Put Side: The 23,000 strike has the highest open interest, followed by 24,000, indicating strong support levels.

Trade Setup for Tomorrow
It’s advisable to adopt a cautious approach and remain light on positions, as Nifty is expected to consolidate. Volatility may increase in upcoming sessions. Should Nifty face further downside, 23,800 will likely serve as a key support.

Good night!

❗️❗️The Federal Open Market Committee (FOMC) is holding a meeting from November 6 to November 7.

NIFTY at crucial support of 24,200.

Nifty Analysis for November 7, 2024: Market Gains Amid Election-Induced Volatility Decline

The Nifty 50 extended its positive momentum on November 6, closing above the 100-day Exponential Moving Average (EMA) for the first time since October 21. The market reacted to easing volatility following Donald Trump’s victory in the U.S. presidential elections, with his Republican party securing the majority. Moving forward, Nifty will need to sustain above the 100-day EMA and the 24,500 level to build on its gains, while 24,200 is expected to act as an immediate support.

On the daily chart, Nifty formed a bullish candlestick pattern with a higher high-higher low formation, signaling optimism in the market. Momentum indicators such as the Relative Strength Index (RSI) also showed a positive crossover, reinforcing this positive trend.

Option Data Analysis
Call Side: New call writing of 45 lakh contracts occurred at the 24,500 strike, which could act as immediate resistance. The highest call open interest remains at the 25,000 strike, followed by 24,800 and 24,500.
Put Side: The 24,000 strike saw the highest put writing, followed by 24,200 and 24,300, establishing strong support levels.

Trade Setup for Tomorrow
Upside Scenario: If Nifty opens with a gap-up and holds above 24,500, a rally toward 24,800 could unfold over the next few sessions.
Downside Scenario: If Nifty gaps down or struggles to sustain above 24,500, a retest of the 24,200 level (today’s low) is possible.

Long-Term View: While the short-term trend shows signs of a pullback, the broader market outlook remains bearish until Nifty decisively closes above its previous swing high of 25,200.

The levels I shared yesterday worked out perfectly, providing strong support/resistance as anticipated. The market respected these levels, confirming our analysis.
I hope everyone had a great trading day 📈