The market plunged to more than a three-month low on January 27, the first day of the February series, on widespread selling, with banks and metal hammered especially hard. Relentless selling by foreign investors worsened the carnage.
The 30-pack Sensex closed 874 points, or 1.45 percent, down at 59,331, while the broad-based Nifty declined 288 points, or 1.6 percent, to 17,604.
It was the second straight session of a sharp downtrend in the run-up to the Budget 2023-24 and the US Fed meeting on February 1.
The Nifty decisively broke the support level of 17,800 and formed a long bearish candlestick on the daily charts. On the weekly scale, too, the index formed a long bearish pattern as it ended the week 2.35 percent lower.
"The Nifty was in a range of 18,250 to 17,750 levels over the last month and the market action of the last two sessions open the potential downside pattern target of around 17,200-17,300 levels in the near term," Nagaraj Shetti, Technical Research Analyst, HDFC Securities, said.
A pullback rally can encounter strong overhead resistance at 17,750 levels, as per the concept of change in polarity and that could be a sell-on-rise opportunity, he said.
Weakness is likely to continue and the Union Budget 2023 is expected to show fresh direction, the market expert said.
The broader market, too, was on a slippery slope with negative breadth. The Nifty midcap 100 index was down 1.5 percent and the smallcap 1.9 percent.
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 Nifty
As per the pivot charts, the key support for the Nifty is at 17,512, followed by 17,419 and 17,270. If the index moves up, the key resistance levels to watch out for are 17,810, 17,903 and 18,052.
The Nifty Bank tanked more than 3 percent, or 1,300 points, to 40,345 on January 27 and formed a long bearish candle on the daily charts.
The important pivot level which will act as crucial support for the index is 40,152 followed by 39,853, and 39,368. On the upside, key resistance levels are 41,122, 41,422 and 41,906.
On the weekly basis, the maximum Call open interest (OI) was at 19,000 strike, with 90.11 lakh contracts, which could be crucial resistance in the February series. It is a deep out-of-money (OTM) option strike, which is generally considered a risky bet.
This is followed by 18,000 strike, comprising 87.97 lakh contracts, and 18,200 strike, where we have more than 59.03 lakh contracts.
Call writing was seen at 18,000 strike, which added 40.19 lakh contracts, followed by 17,800 strike, which added 28.01 lakh contracts, and 18,200 strike, which accumulated 23.34 lakh contracts.
We have seen Call unwinding in deep OTM strikes like 19,500 strike, which shed 92,450 contracts, followed by 19,300 strike, which shed 56,900 contracts, and 19,100 strike, which shed 15,350 contracts.
On the weekly basis, the maximum Put OI is seen at 17,000 strike, with 45.09 lakh contracts, which can be a crucial support level for the February series.
This is followed by the 16,500 strike, comprising 34.43 lakh contracts, and 18,000 strike, where we have 31.63 lakh contracts.
Put writing is seen at 17,000 strike, which added 27.52 lakh contracts, followed by 17,100 strike, which added 24.24 lakh contracts, and 16,800 strike which added 13.85 lakh contracts.
Put unwinding is seen at 18,100 strike, which shed 8 lakh contracts, followed by 17,900 strike, which shed 4.37 lakh contracts, and 18,000 strike, which shed 2.25 lakh contracts.
Stocks with a high delivery percentage
A high delivery percentage suggests that investors are showing interest in these stocks. The highest delivery was seen in HCL Technologies, Kotak Mahindra Bank, Sun Pharmaceutical Industries, ICICI Bank and Infosys.
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, a long build-up was seen in 13 stocks, including Bajaj Auto, Persistent Systems, TVS Motor Company, Ashok Leyland, and DLF, on January 27.
A decline in OI, along with a decrease in price, mostly indicates long unwinding. Based on the OI percentage, 66 stocks saw long unwinding on January 27. These include Maruti Suzuki, REC, City Union Bank, ONGC, and Abbott India.
100 stocks see a short build-up
An increase in OI, along with a decrease in price, mostly indicates a build-up of short positions. Based on the OI percentage, a short build-up was seen in 100 stocks, including Dixon Technologies, Coal India, State Bank of India, Firstsource Solutions and Bank of Baroda.
A decrease in OI, along with an increase in price, mostly indicates a short-covering. Based on the OI percentage, 15 stocks saw short-covering on January 27. These include Indraprastha Gas, UPL, ICICI Prudential Life Insurance, ITC, and Petronet LNG.
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Larsen & Toubro, Tech Mahindra, Bharat Petroleum Corporation, Bajaj Finserv, Bajaj Holdings & Investment, CSB Bank, Emkay Global Financial Services, Exide Industries, GAIL (India), Inox Leisure, Laurus Labs, Mazagon Dock Shipbuilders, Nippon Life India Asset Management, Punjab National Bank, REC, SRF, Trident, and Welspun India will be in focus ahead of quarterly earnings on January 30.
Stocks in the news
Bajaj Finance: The finance company clocked a 40 percent year-on-year growth in consolidated net profit at Rs 2,973 crore for the December FY23 quarter with loan losses and provisions falling 20 percent YoY to Rs 841 crore. Net interest income increased 24 percent YoY to Rs 7,435 crore and assets under management (AUM) grew by 27 percent to Rs 2.3 lakh crore. New loans booked in the December quarter were the highest ever at 7.84 million, up 5 percent YoY. Customer franchise stood at 66.05 million, a 19 percent YoY growth. The company recorded its highest-ever quarterly increase in its customer franchise by 3.14 million during the quarter.
Vedanta: The billionaire Anil Agarwal-owned company reported a 42.3 percent year-on-year fall in consolidated profit at Rs 3,091 crore for the December quarter, hit by weak operating performance and muted topline growth. It had higher input costs, power and fuel expenses, and finance cost for the quarter YoY. Revenue from operations at Rs 34,102 crore grew by 0.01 percent from the year-ago period. The company has approved plans to source 91 MW hybrid renewable power aluminium, copper, and oil & gas operations; and 600 MW solar power for aluminium operations. It aims to achieve substantial consumption of renewable energy for smelting and associated operations and meet power requirements of capacity expansion, the company said.
Tata Elxsi: The design and technology services provider has registered a 29 percent year-on-year growth in profit at Rs 195 crore for the quarter ended December FY23, backed by topline and other income. Revenue from operations for the quarter at Rs 818 crore grew by 29 percent over a year-ago period.
Tube Investments of India: Subsidiary TI Clean Mobility has entered into a share purchase agreement for the acquisition of the remaining 30.04 percent equity shares held by the founders of Cellestial E-Mobility for Rs 50.90 crore. The proposed investment is part of TI Clean Mobility's plan to consolidate its holding in the electric tractors business.
Godfrey Phillips India: The tobacco manufacturer has reported a 60 percent year-on-year increase in consolidated profit at Rs 187 crore for the December quarter of FY23, led by healthy operating income growth of 64 percent and margin expansion. Revenue from operations grew by 28 percent YoY to Rs 1,112 crore in the quarter.
Aarti Drugs: The pharma company registered a 37 percent year-on-year decline in consolidated profit at Rs 36.67 crore for the quarter ended December 31, 2022, hit by weak operating performance and tepid topline growth. Consolidated revenue at Rs 664 crore was up 4.6 percent from the year-quarter compared.
CMS Info Systems: The banking logistics and technology services provider has clocked a 26 percent YoY growth in profit at Rs 76 crore for the quarter ended December 31, 2022, with EBITDA rising 29 percent YoY to Rs 135 crore and revenue climbing 21 percent to Rs 488 crore. The company's operating profit margin expanded 171 bps YoY at 27.7 percent for the quarter.
Fund Flow
Foreign institutional investors (FII) on January 27 net sold shares worth Rs 5,977.86 crore, the highest outflow in a single day since April 18, 2022, whereas domestic institutional investors (DII) net bought shares worth Rs 4,252.33 crore, as per provisional NSE data.
Stocks under F&O ban on NSE
The National Stock Exchange has added Ambuja Cements to its F&O ban list for January 30. Securities 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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