F&O Manual | Nifty breaks positive streak, key straddle position at 19,700 strike

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The equity benchmark indices are trading in the negative territory, breaking their two consecutive positive streaks. IT, power and Bank are down 0.5-1 percent, while realty index is up 1 percent.

V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, commented, "There are two major macro trends that can influence the market. The global trend is slightly negative, while the domestic trend is largely positive. The US retail inflation for September, at 3.7 percent, came in slightly higher than expected. The implication of this higher inflation trend is that the fight to bring US inflation to the long-term target of 2 percent will take more time. Therefore, rates will remain higher for longer. This will restrain a rally in equity markets.

On the other hand, the domestic macros have turned distinctly positive, with the CPI inflation in September falling steeply to 5.02 percent and the IIP for August rising impressively to 10.3 percent. This implies that the MPC can pause for the rest of FY 24 and go for a rate cut in Q2 of CY24.

While this is positive for the economy, the market is likely to be weighed down by the results of IT majors, which are struggling with weak numbers on revenue guidance for FY24 and a lack of clarity on growth recovery. Leading banking names have the strength to continue supporting the market."

Options data suggests that Nifty is facing stiff resistance at the 19,800 strike with heavy call writing. According to analysts, "The index maintains a near-term support zone at 19,600, while the near-term target on the upside is 20,000. The support for the day is seen at 19.550 levels, while the resistance is seen at 19,800 levels."

Furthermore, BankNifty also witnessed a sluggish movement, with an overall analyst bias maintaining a cautiously positive approach. As per Prabhudhas Lilladher, "As mentioned earlier, a decisive move past the 44,700 level of the important 50-EMA zone is necessary to overall improve the trend and anticipate further rise. BankNifty is expected to have a daily range between 44,300 and 45,000 levels.

Among individual stocks, Mphasis, Infosys and Adani Enterprise saw a bearish set-up. While short covering is seen in Idea, HCL Tech and TCS.

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