The equity market witnessed extreme volatility on February 1, when Finance Minister Nirmala Sitharaman presented the Union Budget 2023-24 in Parliament. The Budget proposals pushed benchmark indices sharply higher by 1.75 percent intraday, but the steep correction in Adani group stocks, life insurance and select banks stocks weighed on sentiment in the later part of the session.
As a result, the BSE Sensex closed with just 158 points (0.27 percent) gains at 59,708, while the Nifty50 fell 46 points to 17,616 and formed a bearish candle on the daily charts with a long upper and lower shadow which resembles a High Wave kind of pattern, indicating indecisiveness among buyers and sellers about the future market trend.
"A long bear candle was formed on the daily chart with long upper and lower shadows. Technically, this pattern indicates high volatility in the market. The formation of long lower shadows in the last four daily candles signals the presence of strong support at 17,400-17,300 levels and the market could once again show an upside bounce in the coming sessions," Nagaraj Shetti, Technical Research Analyst at HDFC Securities said.
Shetti feels the short-term trend of Nifty is highly volatile. Having moved up smartly from the lows in the last few occasions, there is a possibility of Nifty retesting the crucial resistance of the 17,800 level in the near term, and further sustainable upside could occur only above this hurdle, the market expert said.
The broader markets underperformed benchmark indices as the Nifty Midcap 100 and Smallcap 100 indices fell by 0.94 percent and 1.15 percent, respectively.
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Note: The open interest (OI) and volume data of stocks in this article are the aggregates of three-month data, and not just of the current month.
Key support and resistance levels on the Nifty
As per the pivot charts, we have the key support level for the Nifty at 17,411, followed by 17,265, and 17,028. If the index moves up, the key resistance levels to watch out for are 17,884, followed by 18,030 and 18,266.
The Nifty Bank has also seen significant volatility, falling 142 points to 40,513 and forming a bearish candle on the daily charts with long upper and lower shadows, which resembles a High Wave kind of pattern.
The important pivot level, which will act as crucial support for the index, is placed at 39,708, followed by 39,112, and 38,148. On the upside, key resistance levels are placed at 41,638, followed by 42,234, and 43,198.
On the weekly basis, we have seen the maximum Call open interest (OI) at 18,000 strike, with 1.23 crore contracts, which may be a crucial resistance level in coming sessions.
This is followed by an 18,100 strike, comprising 80.29 lakh contracts, and an 18,200 strike, where we have more than 69.45 lakh contracts.
Call writing was seen at 18,000 strike, which added 33.05 lakh contracts, followed by 18,100 strike, which added 32.45 lakh contracts, and 17,700 strike, which added 26 lakh contracts.
We have seen Call unwinding in 19,000 strike, which shed 13.05 lakh contracts, followed by 18,700 strike, which shed 13.03 lakh contracts, and 18,500 strike, which shed 11.35 lakh contracts.
On the weekly basis, the maximum Put OI was seen at 17,000 strike, with 70.09 lakh contracts, which can be a crucial support level for coming sessions.
This is followed by the 16,500 strike, comprising 37.49 lakh contracts, and 17,500 strike, where we have 37.1 lakh contracts.
Put writing was seen at 17,000 strike, which added 16.06 lakh contracts, followed by 17,200 strike, which added 14.76 lakh contracts, and 17,300 strike which added 7.68 lakh contracts.
Put unwinding was seen at 16,300 strike, which shed 21.73 lakh contracts, followed by 16,700 strike, which shed 17.16 lakh contracts, and 18,000 strike, which shed 10.19 lakh contracts.
Stocks with a high delivery percentage
A high delivery percentage suggests that investors are showing interest in these stocks. We have seen the highest delivery in Syngene International, Colgate Palmolive, ICICI Bank, Torrent Pharma, and Dr Reddy's Labs, among others.
An increase in open interest (OI), along with an increase in price, mostly indicates a build-up of long positions. Based on the OI percentage, we have seen a long build-up in 27 stocks including Cholamandalam Investment, Apollo Tyres, ITC, Siemens, and Britannia Industries.
A decline in OI, along with a decrease in price, mostly indicates long unwinding. Based on the OI percentage, 66 stocks saw long unwinding, including Ambuja Cements, Adani Enterprises, ONGC, LIC Housing Finance, and Oberoi Realty.
An increase in OI, along with a decrease in price, mostly indicates a build-up of short positions. Based on the OI percentage, we have seen a short build-up in 69 stocks including HDFC Life Insurance Company, Coal India, SBI Life Insurance Company, Dalmia Bharat, and Hero MotoCorp.
31 stocks witnessed short-covering
A decrease in OI, along with an increase in price, mostly indicates a short-covering. Based on the OI percentage, 31 stocks were on the short-covering list, including Gujarat Gas, Polycab India, ICICI Bank, SRF, and SBI Cards.
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HDFC, Tata Consumer Products, Titan Company, Aditya Birla Capital, Aegis Logistics, Apollo Tyres, Bajaj Electricals, Berger Paints India, Birlasoft, Cera Sanitaryware, Coromandel International, Crompton Greaves Consumer Electricals, Dabur India, Deepak Fertilisers, Godrej Properties, Karnataka Bank, Max India, SIS, Ujjivan Small Finance Bank, and Welspun Corp will be in focus ahead of their quarterly earnings on February 2.
Stocks in the news
Britannia Industries: The company has reported a 156 percent year-on-year growth in consolidated profit at Rs 932.4 crore for December FY23 quarter led by strong operating performance and exceptional income of Rs 359 crore. Revenue from operations at Rs 4,197 crore grew by 17.4 percent over a year-ago period. EBITDA jumped 51.5 percent to Rs 817.6 crore for the quarter YoY.
Lakshmi Machine Works: The textile machinery manufacturer has reported a massive 76 percent year-on-year growth in profit at Rs 113 crore for quarter ended December FY23, backed by healthy operating performance and topline. Revenue from operations at Rs 1,222 crore increased by 34 percent compared to year-ago period.
Syngene International: Promoter Biocon has offloaded 4 crore shares of the company via open market transactions on February 1. As a result, its shareholding in Syngene reduced by 9.96 percent to 54.6 percent, from 64.56 percent earlier. Government of Singapore bought 1.57 crore shares of Syngene at Rs 560 per share.
Craftsman Automation: The auto ancillary company has completed acquisition of 76 percent stake in DR Axion India. In December 2022, it had signed a definitive agreement for acquiring 8.57 crore shares of DR Axion India.
Coal India: The country's largest coal mining company has announced production of 71.9 million tonnes of coal for January 2023, growing 11.5 percent over a year-ago month, while offtake rose by 6.1 percent to 64.5 million tonnes in the same period. These are provisional numbers.
Eicher Motors: Royal Enfield has sold 74,746 motorcycles in January 2023, rising 27 percent over 58,838 units sold in same month last year. But exports dropped by 23 percent to 7,044 motorcycles in the same period. The company has registered a 45 percent YoY growth by selling 6.91 lakh motorcycles in April 2022-January 2023 period.
Ashok Leyland: The commercial vehicle maker has sold 17,200 units in the month of January 2023, growing 23 percent over a year-ago period with healthy growth across segments. Medium & heavy commercial vehicle sales increased by 28 percent to 11,050 units in the same period, and light commercial vehicle segment registered 17 percent YoY growth at 6,150 units for January.
Alembic Pharmaceuticals: The pharma company has registered a 29 percent year-on-year decline in consolidated profit at Rs 122 crore for quarter ended December FY23, impacted by weak operating performance and lower other income. However, revenue from operations at Rs 1,509 crore increased by 19 percent YoY in the same period with growth across verticals as US business grew by 10 percent to Rs 432 crore and India segment reported a 12 percent growth at Rs 545 crore.
Fund Flow
Foreign institutional investors (FII) bought shares worth Rs 1,785.21 crore, while domestic institutional investors (DII) purchased shares worth Rs 529.47 crore on February 1, as per provisional data available on the NSE.
Stocks under F&O ban on NSE
The National Stock Exchange has retained Ambuja Cements on its F&O ban list for February 2. Securities thus banned under the F&O segment include companies where derivative contracts have crossed 95 percent of the market-wide position limit.
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