The equity market rebounded sharply and settled with decent gains on February 3, driven by buying in banking & financial services, auto, select FMCG, and technology stocks. The positive news on Adani Group and the fall in oil prices also lifted market sentiment.
The BSE Sensex rallied 910 points or 1.52 percent to 60,842, while the Nifty50 jumped 244 points or 1.4 percent to 17,854 and formed a bullish candle on the daily charts with long lower shadow indicating there was a support-based buying along with huge volumes.
The index has surpassed the crucial 17,800 level after getting support at 17,550 (200 EMA), which can be a crucial level for a further uptrend in coming sessions.
"A long bull candle was formed on the daily chart with a long lower shadow. This market action signals an upside breakout of the crucial overhead resistance of 17,750-17,800 levels. This is a positive indication and one may expect further upside in the short term," Nagaraj Shetti, Technical Research Analyst at HDFC Securities said.
Shetti feels the formation of long lower shadows in the last few daily candles around 17,500 levels indicates a strong base for the Nifty and the said support is unlikely to be broken on the downside soon.
On the weekly chart, the Nifty has formed a long bull candle with upper and lower shadow and closed with 250 points gains. The Nifty on the weekly chart closed at the edge of the previous downside breakout point of the larger sideways range at the 17,800 level.
"Technically, this pattern signals false downside breakout of the range and this is likely to open the doors of upside pattern target of around 18,250 levels (upper end of range) in the near term," the expert said.
Hence, overall, he feels the short-term trend of Nifty continues to be positive. "The upside breakout of crucial resistance at 17.800 levels suggests an upside target for Nifty around 18,250 levels in the next 1 or 2 weeks. Immediate support is at 17,650 levels," he said.
However, the broader markets were moderately under pressure with the Nifty Midcap 100 index falling 0.2 percent and Smallcap 100 index declining 0.35 percent on weak breadth.
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 17,660, followed by 17,593, and 17,483. If the index moves up, the key resistance levels to watch out for are 17,879, followed by 17,946 and 18,056.
Banks played a key role in Friday's rally as the Bank Nifty jumped 830 points or 2 percent to 41,500, outperforming broader markets. The banking index has formed a bullish candle on the daily charts with higher high higher low formation. Overall, the index still traded within Wednesday's trading range as breaking out the same range on either side can give firm direction to the index and markets.
The important pivot level, which will act as crucial support for the index, is placed at 40,861, followed by 40,642, and 40,286. On the upside, key resistance levels are placed at 41,572, followed by 41,791, and 42,147.
On a weekly basis, we have seen the maximum Call open interest (OI) at 18,000 strike, with 59.06 lakh contracts, which may be a crucial resistance level in coming sessions.
This is followed by an 18,500 strike, comprising 55.86 lakh contracts, and an 18,200 strike, where we have more than 46.36 lakh contracts.
Call writing was seen at 18,200 strike, which added 20.01 lakh contracts, followed by 18,000 strike, which added 19.07 lakh contracts, and 18,300 strike, which added 18.83 lakh contracts.
We have seen Call unwinding in 17,600 strike, which shed 8.44 lakh contracts, followed by 17,500 strike, which shed 6.38 lakh contracts, and 17,700 strike, which shed 1.49 lakh contracts.
On a weekly basis, the maximum Put OI was seen at 17,600 strike, with 63.95 lakh contracts, which can be a crucial support level for coming sessions. In fact, in the recent correction and volatility, the Nifty has always given closing above 17,600 though it has broken many a time on an intraday basis.
This is followed by the 17,700 strike, comprising 51.96 lakh contracts, and the 17,500 strike, where we have 51.28 lakh contracts.
Put writing was seen at 17,700 strike, which added 43.33 lakh contracts, followed by 17,600 strike, which added 31.8 lakh contracts, and 17,500 strike which added 28.36 lakh contracts.
There was hardly any Put unwinding seen on Friday.
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 GMR Airports Infrastructure, HDFC, SBI Life Insurance Company, Kotak Mahindra Bank, and Bharti Airtel, 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 54 stocks including M&M Financial Services, IndiaMART InterMESH, Manappuram Finance, Reliance Industries, and Aditya Birla Capital.
A decline in OI, along with a decrease in price, mostly indicates long unwinding. Based on the OI percentage, 21 stocks saw long unwinding, including Crompton Greaves Consumer Electricals, Dixon Technologies, Apollo Tyres, Coromandel International, and Tata Motors.
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 60 stocks including Divi's Laboratories, JK Cement, Birlasoft, Deepak Nitrite, and Tech Mahindra.
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 Adani Enterprises, Adani Ports, Syngene International, Ambuja Cements, and Bajaj Finserv.
Aarti Pharmalabs: JP Morgan Funds has sold 7.14 lakh equity shares in the company via open market transactions, at an average price of Rs 255.33 per share. The stake sale was worth Rs 18.23 crore.
GMR Airports Infrastructure: Veda Investors Fund LP has bought 5.75 crore equity shares in the company via open market transactions at an average price of Rs 37.2 per share. The stake buy was worth Rs 214.23 crore. However, H/D Investors Fund LP sold 3.35 crore shares and C/D Investors Fund LP offloaded 5.5 crore shares at an average price of Rs 37.2 per share. Their stake sale was worth Rs 329.80 crore.
(For more bulk deals, click here)
Results on February 6
Tata Steel, Adani Transmission, AGS Transact Technologies, Balaji Amines, Easy Trip Planners, Infibeam Avenues, JK Paper, Kolte-Patil Developers, LIC Housing Finance, Monte Carlo Fashions, Muthoot Finance, Nuvoco Vistas Corporation, OnMobile Global, Shankara Building Products, SJVN, Tejas Networks, Unichem Laboratories, and Varun Beverages will be in focus on February 6 ahead of their quarterly earnings.
Stocks in the news
State Bank of India: The country's largest lender has recorded a massive 68.5 percent year-on-year growth in standalone profit at Rs 14,205 crore for the December FY23 quarter, with net interest income growing 24 percent to Rs 38,069 crore for the quarter, beating analysts' estimates. Fall in provisions, higher other income & operating income boosted profitability. Loan growth was 17.6 percent and deposits grew by 9.5 percent YoY for the quarter. Asset quality improved on a sequential basis, with gross non-performing assets falling 38 bps QoQ to 3.14 percent and net NPA declining 3 bps to 0.77 percent. SBI's exposure to Adani group in absolute terms is close to Rs 27,000 crore.
ITC: The cigarette-to-FMCG-to-hotel major has registered a 21 percent year-on-year growth in profit at Rs 5,031 crore for the quarter ended December FY23 despite tepid revenue growth, supported by healthy operating performance. Revenue for the quarter at Rs 16,226 crore grew by 2.3 percent aided by cigarettes, FMCG, hotels and paper segments, but agribusiness tanked 37 percent YoY to Rs 3,124 crore. At the operating level, EBITDA jumped 22 percent to Rs 6,223 crore with the margin expanding by 620 bps compared to the year-ago period.
InterGlobe Aviation: The low-cost airline operator has recorded an 11-fold year-on-year increase in profit at Rs 1,422.6 crore as revenue for the quarter at Rs 14,933 crore increased by 60.7 percent and EBITDAR at Rs 3,399 crore grew by 70.3 percent YoY. EBITDAR margin expanded by 130 bps YoY. The margin was hit by higher fuel costs. Profit excluding foreign exchange loss (Rs 586.5 crore) came in at Rs 2,009.1 crore for the quarter, rising 16-fold YoY. Passenger traffic increased by 25.8 percent to 2.23 crore and yield improved by 21.9 percent to Rs 5.38 and load factor improved by 5.4 points to 85.1 percent.
Vodafone Idea: The Government of India has directed the telecom operator to convert AGR dues of Rs 16,133 crore into equity shares. The company has been directed by the Ministry of Communications to issue 1,613.31 crore equity shares of the face value of Rs 10 each at an issue price of Rs 10 each. The Government passed the said order for the conversion of AGR dues into shares on February 3.
Tata Power Company: The power generation and distribution company has reported a 91 percent year-on-year growth in consolidated profit at Rs 1,052 crore for the three-month period ended December FY23 led by better performance across all businesses. Consolidated revenue grew by 30 percent YoY to Rs 14,339 crore for the quarter driven by capacity addition in renewables, higher generation in thermal plants and higher sales in distribution companies. EBITDA for the quarter at Rs 2,818 crore surged by 53 percent YoY on capacity addition in renewables and better performance across all businesses.
M&M Financial Services: The financial services provider has recorded a standalone profit at Rs 629 crore for the three-month period ended December FY23, down 30 percent YoY due to a high base in the year-ago period. The Q3FY22 had seen a significant reversal of impairment provisions as a result of improvement in asset quality which had deteriorated during Q1 FY22 due to the second wave of COVID-19. Net interest income grew by 7 percent YoY to Rs 1,650 crore with loan book increasing by 21 percent to Rs 77,344 crore. As of December-end, the company carried a total liquidity buffer of approximately Rs 10,800 crore, covering more than 3 months' obligations. M&M Financial has approved the appointment of Raul Rebello, currently the Chief Operating Officer of the company, as the MD & CEO -Designate.
Marico: The FMCG company has registered a 5.04 percent year-on-year growth in consolidated profit at Rs 333 crore for the October-December period of FY23 led by higher operating margin performance and other income. Revenue for the quarter at Rs 2,470 crore grew by 2.6 percent compared to the year-ago period with India's business rising 1.9 percent YoY to Rs 1,851 crore and the international segment growing 5 percent to Rs 619 crore. At the operating level, EBITDA increased by 5.8 percent YoY to Rs 456 crore and the margin expanded by 56 bps YoY to 18.46 percent on lower input costs.
One 97 Communications: The digital payments platform Paytm operator reported a consolidated loss of Rs 392 crore for the quarter ended December FY23, falling from a loss of Rs 778.5 crore in the year-ago period and a loss of Rs 571.5 crore in the previous quarter. Consolidated revenue from operations at Rs 2,062 crore for the quarter grew by 42 percent YoY and up 7.7 percent sequentially. Merchants paying subscriptions for payment devices stood at 5.8 million during the quarter, up by 3.8 million YoY, while in Q3FY2023, the number of loans disbursed through the platform grew to 10.5 million, up 137 percent YoY, and the value of loans disbursed grew to Rs 9,958 crore, a growth of 357 percent YoY.
Fund Flow
Foreign institutional investors (FII) sold shares worth Rs 932.44 crore, while domestic institutional investors (DII) purchased shares worth Rs 1,264.74 crore on February 3, as per provisional data available on the NSE.
Stocks under F&O ban on NSE
The National Stock Exchange has retained Adani Ports on its F&O ban list for February 6 and has removed Ambuja Cements from it. 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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