The domestic equities witnessed yet another volatile session on February 2 as the selling in Adani group, oil & gas, metal & select financial services stocks impacted sentiment. However, buying in FMCG, IT and select banking stocks along with positive global cues provided good support.
The BSE Sensex gained 224 points to 59,932, while the Nifty50 traded within the previous day's trading range and fell 6 points to 17,610, forming a bullish candle on the daily charts with upper and lower wicks as the closing was higher than opening levels.
"A small positive candle was formed on the daily chart with minor upper and lower shadows. Technically, this pattern indicates that the market is in a near-term bottom reversal mode and the Nifty is expected to show a pullback rally in the coming sessions," Nagaraj Shetti, Technical Research Analyst at HDFC Securities said.
He feels the area of 17,500 (200-day EMA) has been acting as a strong support of the market in the last few sessions and observed an emergence of buying interest from the lows.
Hence, further upside from here could pull Nifty towards the crucial overhead resistance of 17,800 levels again in the next few sessions before showing another round of downward correction from the highs, the market expert said.
The broader markets closed higher with the Nifty Midcap 100 and Smallcap 100 indices rising 0.15 percent and 0.6 percent, respectively but the breadth was tilted in favour of bears.
We have collated 15 data points to help you spot profitable trades:
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 17,491, followed by 17,442, and 17,362. If the index moves up, the key resistance levels to watch out for are 17,650, followed by 17,699 and 17,778.
The Nifty Bank has outperformed Nifty50, rising 156 points to 40,669 and formed a bullish candle on the daily charts with small upper and lower shadows. Overall, the index traded within the previous day's trading range.
The important pivot level, which will act as crucial support for the index, is placed at 40,016, followed by 39,780, and 39,400. On the upside, key resistance levels are placed at 40,777, followed by 41,012, and 41,392.
On the monthly basis, we have seen the maximum Call open interest (OI) at 18,000 strike, with 29.04 lakh contracts, which may be a crucial resistance level in coming sessions.
This is followed by an 18,500 strike, comprising 18.86 lakh contracts, and a 17,600 strike, where we have more than 17.5 lakh contracts.
Call writing was seen at 17,600 strike, which added 5.11 lakh contracts, followed by 17,700 strike, which added 2.11 lakh contracts, and 18,200 strike, which added 1.92 lakh contracts.
We have seen Call unwinding in 18,600 strike, which shed 5.72 lakh contracts, followed by 16,500 strike, which shed 42,400 contracts, and 18,800 strike, which shed 36,100 contracts.
On the monthly basis, the maximum Put OI was seen at 17,500 strike, with 30.38 lakh contracts, which can be a crucial support level for coming sessions.
This is followed by the 17,000 strike, comprising 27.46 lakh contracts, and the 18,000 strike, where we have 22.13 lakh contracts.
Put writing was seen at 17,600 strike, which added 5.22 lakh contracts, followed by 17,000 strike, which added 4.12 lakh contracts, and 16,500 strike which added 1.63 lakh contracts.
Put unwinding was seen at 17,900 strike, which shed 67,850 contracts, followed by 17,500 strike, which shed 48,850 contracts, and 18,000 strike, which shed 42,900 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 HDFC AMC, Alkem Laboratories, SBI Life Insurance Company, NTPC, and Hindustan Unilever, 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 48 stocks including IDFC, State Bank of India, Persistent Systems, JK Cement, and Britannia Industries.
A decline in OI, along with a decrease in price, mostly indicates long unwinding. Based on the OI percentage, 26 stocks saw long unwinding, including Syngene International, ONGC, Tata Steel, Jubilant Foodworks, and Gujarat Gas.
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 58 stocks including Birlasoft, Adani Ports, ACC, Coromandel International, and HDFC Life Insurance Company.
59 stocks witnessed short-covering
A decrease in OI, along with an increase in price, mostly indicates a short-covering. Based on the OI percentage, as many as 59 stocks were on the short-covering list, including Alkem Laboratories, LIC Housing Finance, Tata Chemicals, Metropolis Healthcare, and Ambuja Cements.
Sapphire Foods India: Fennel Private Limited has sold 6.29 lakh equity shares (0.99 percent stake) in Sapphire via open market transactions at an average price of Rs 1,200 per share. These shares are worth Rs 75.56 crore.
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Results on February 3, and February 4
ITC, State Bank of India, Divi's Labs, Bank of Baroda, Tata Power, InterGlobe Aviation, One 97 Communications (Paytm), Marico, Mahindra & Mahindra Financial Services, Zydus Lifesciences, Manappuram Finance, Aarti Industries, Borosil, Clariant Chemicals, Elgi Equipments, Emami, Engineers India, India Cements, Intellect Design Arena, JK Tyre & Industries, Jubilant Pharmova, Kansai Nerolac Paints, Nava, Praj Industries, Quess Corp, Shipping Corporation of India, Sun TV Network, and Tube Investments of India would be in focus ahead of quarterly earnings on February 3.
MCX India, Affle (India), Apex Frozen Foods, Atul Auto, Birla Corporation, Dalmia Bharat, Finolex Industries, India Pesticides, Relaxo Footwears, Rossari Biotech, Skipper, and Voltamp Transformers will be in focus ahead of December FY23 quarter earnings on February 4.
Stocks in the news
HDFC Asset Management Company: The Sebi has given an approval and permitted abrdn Investment Management to reduce its shareholding in HDFC AMC to less than 10 percent. In December 2022, HDFC AMC had received letter from abrdn Investment Management, one of the promoters holding 10.21 percent in the company, intending to sell their entire stake in the company. Abrdn Investment Management is the co-sponsor of HDFC Mutual Fund.
Tata Consumer Products: The FMCG company has recorded a 26 percent year-on-year growth in consolidated profit at Rs 364.4 crore for quarter ended December FY23 despite weak operating margin, led by tax write-back, exceptional income and higher other income. Revenue for the quarter grew by 8.3 percent YoY to Rs 3,475 crore with India business growth of 8 percent and international business rising 4 percent, however, EBITDA fell 1.7 percent to Rs 454 crore and margin declined by 130 bps to 13.1 percent for the quarter.
Adani Enterprises: The National Stock Exchange (NSE) has put Adani Enterprises, Adani Port, Ambuja Cement under additional surveillance measure (ASM) framework starting February 3, especially after massive stock rout in most of Adani group stocks. This will mean the intraday trading will also require 100 percent upfront margin.
IndusInd Bank: The Hinduja Group is looking to increase its stake in IndusInd Bank to 26 percent from the existing 16.51 percent, reports CNBC-TV18 quoting sources. IndusInd International Holdings, promoter of IndusInd Bank, is preparing the application for the process and will further submit the same to the Reserve Bank of India (RBI), sources said.
Mazagon Dock Shipbuilders: Sanjeev Singhal, with effect from February 1, 2023, has been given additional charge of Chairman & Managing Director of Mazagon Dock Shipbuilders. Singhal joined Mazagon Dock as Director (Finance) on January 8, 2020.
Inox Green Energy Services: The wind power operation and maintenance service provider entered into a definitive investment agreement with I-Fox Windtechnik India, an independent O&M wind service provider, to acquire 51 percent stake in I-Fox at Rs 35,947.71 per share. I-Fox has a fleet of 230+MW majorly operating in South India. With this acquisition, company entered into multi-brand OEM wind turbine O&M business.
Likhitha Infrastructure: The company has received an order worth Rs 129.63 crore from GAIL (India). The scope of work included pipeline laying and composite works for PART-B (Nagpur Jharsuguda) of MNYJPL project. The contract has to be executed within 14 months from the date of letter of intent.
Berger Paints India: The paint company has recorded a 20.5 percent year-on-year growth in consolidated profit at Rs 200.94 crore for quarter ended December FY23 impacted by weak operating margin performance. Revenue for the quarter at Rs 2,694 crore grew by 5.6 percent, but EBITDA fell by 11 percent to Rs 350 crore compared to year-ago period.
Apollo Tyres: The tyre manufacturer has reported a 31 percent year-on-year growth in consolidated profit at Rs 292.1 crore for December FY23 quarter despite spike in input & finance costs. Revenue for the quarter at Rs 6,423 crore increased by 12.5 percent and EBITDA jumped 23 percent to Rs 913.4 crore with margin expansion of 120 bps compared to year-ago period. Jaimini Bhagwati is appointed as Independent Director on the board.
Fund Flow
Foreign institutional investors (FII) sold shares worth Rs 3,065.35 crore, while domestic institutional investors (DII) purchased shares worth Rs 2,371.36 crore on February 2, as per provisional data available on the NSE.
Stocks under F&O ban on NSE
The National Stock Exchange has added Adani Ports and retained Ambuja Cements under its F&O ban list for February 3. 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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