Trade setup for Thursday: 15 things to know before opening bell

Nifty likely to hit a new high soon if holds 21,970

The market seems to be cautious ahead of RBI's monetary policy scheduled on February 8 as the participants may be awaiting the commentary about the rate cut cycle and inflation and growth forecast.

The Nifty50 made a healthy attempt on February 7 to close the big bearish gap (21,970 is the upper band of the gap) created on January 17 but failed due to selling pressure in late morning deals and remained rangebound in the rest of the session.

Hence, unless the index gives a strong closing above 21,970, the sustained uptrend towards a record high of 22,126 is unlikely in coming sessions, while the 21,750-21,700 is expected to be immediate support for the index, experts said.

On January 7, the BSE Sensex was down 34 points at 72,152, while the Nifty 50 gained 1.1 points at 21,930.5 and formed a bearish candlestick pattern on the daily charts with a lower shadow on the daily charts.

"Technically, this action indicates choppy movement and the market is expecting RBI's mid-quarter policy outcome to show a directional move," Nagaraj Shetti, senior technical research analyst at HDFC Securities said.

He feels the short-term trend of Nifty continues to be positive. "There is a higher possibility of an upside breakout of the 21,950-22,000 mark in the short term. Immediate support is at 21,750," he said.

For the past few days, the Nifty has been consolidating above the critical moving averages, indicating a positive trend in the short term. "A drop below 21,700 might trigger panic in the market. Conversely, a decisive move above 22,125 could spark a smart rally in the market," Rupak De, senior technical & derivative analyst at LKP Securities said.

The broader markets remained strong for yet another session, with the Nifty Midcap 100 and Smallcap 100 indices rising over 0.7 percent each.

The pivot point calculator indicates that the Nifty is likely to take immediate support at 21,874 followed by 21,829 and 21,755 levels, while on the higher side, it may see immediate resistance at 21,948 followed by 22,067 and 22,141 levels.

Meanwhile, on February 7, the Bank Nifty snapped a three-day losing streak and climbed 128 points to 45,819 but formed a bearish candlestick pattern on the daily charts with a long lower shadow on the daily timeframe as the closing was below opening levels. The index has been taking support at 100-day EMA on a closing basis.

"We expect the retracement to continue till 46,300-46,500 over the next few trading sessions. Crucial support is placed at 45,500-45,400," Jatin Gedia, Technical Research Analyst at Sharekhan by BNP Paribas said.

As per the pivot point calculator, the Bank Nifty is expected to take support at 45,665 followed by 45,560 and 45,392 levels, while on the higher side, the index may see resistance at 45,859 followed by 46,107 and 46,276 levels.

As per the weekly options data, the 22,300 strike owned the maximum Call open interest with 88.66 lakh contracts, which can act as a key resistance level for the Nifty in the short term. It was followed by the 22,000 strike, which had 87.96 lakh contracts, while the 22,100 strike had 86 lakh contracts.

Meaningful Call writing was seen at the 22,300 strike, which added 52.39 lakh contracts followed by 22,100 and 22,000 strikes adding 39.39 lakh and 38.68 lakh contracts, respectively.

The maximum Call unwinding was at the 22,800 strike, which shed 13.34 lakh contracts followed by 23,000 and 22,700 strikes, which shed 11.77 lakh and 8.13 lakh contracts.

On the Put front, the maximum open interest was seen at 21,900 strike, which can act as a key support level for Nifty, with 86.97 lakh contracts. It was followed by 21,700 strike comprising 75.68 lakh contracts and then 21,800 strike with 73.67 lakh contracts.

Meaningful Put writing was at 21,400 strike, which added 40.94 lakh contracts, followed by 21,900 strike and 21,300 strike, which added 22.69 lakh contracts and 22.24 lakh contracts.

Put unwinding was seen at 21,100 strike, which shed 19.02 lakh contracts, followed by 21,000 strike, which shed 18.91 lakh contracts and 20,800 strike, which shed 7.23 lakh contracts.

A high delivery percentage suggests that investors are showing interest in the stock. SRF, Indus Towers, Hindustan Unilever, Bharti Airtel and ITC saw the highest delivery among the F&O stocks.

A long build-up was seen in 56 stocks, which included Delta Corp, Balrampur Chini Mills, Trent, Metropolis Healthcare and Max Financial Services. An increase in open interest (OI) and price indicates a build-up of long positions.

Based on the OI percentage, 43 stocks saw long unwinding including Ashok Leyland, Tata Consultancy Services, National Aluminium Company, Infosys and Eicher Motors. A decline in OI and price indicates long unwinding.

A short build-up was seen in 43 stocks including Berger Paints, Navin Fluorine International, Bank of Baroda, Bata India and Power Grid Corporation of India. An increase in OI along with a fall in price points to a build-up of short positions.

Based on the OI percentage, 44 stocks were on the short-covering list. This included Chambal Fertilisers & Chemicals, HDFC Life Insurance Company, Pidilite Industries, Dr Reddy's Laboratories and ICICI Lombard General Insurance Company. A decrease in OI along with a price increase is an indication of short-covering.

The Nifty Put Call ratio (PCR), which indicates the mood of the equity market, dropped to 1 on February 7, compared to the 1.11 level in the previous session. The PCR at 1 indicates that the trading volume of Put options is equal to the Call options, which generally indicates a neutral trend ahead.

Grasim Industries, Life Insurance Corporation of India, Power Finance Corporation, Zomato, Biocon, Aarti Industries, Apollo Hospitals Enterprise, Aster DM Healthcare, Astrazeneca Pharma India, Balrampur Chini Mills, BEML, Escorts Kubota, India Shelter Finance Corporation, Patanjali Foods, Rail Vikas Nigam, Thermax, Torrent Power and Zydus Wellness will release December quarter earnings scorecard on February 8.

Tata Consumer Products: The FMCG company has registered a 17.3 percent on-year decline in consolidated profit at Rs 301.5 crore for the quarter ended December FY24 despite healthy operating numbers, impacted by an exceptional loss of Rs 91.53 crore. Revenue from operations grew by 9.5 percent YoY to Rs 3,804 crore for the quarter.

Power Grid Corporation of India: The state-owned electric services company has recorded a 10.5 percent year-on-year growth in consolidated net profit at Rs 4,028.3 crore for the October-December period of FY24 despite higher tax costs, driven by healthy operating numbers. Revenue from operations grew by 2.6 percent YoY to Rs 11,549.8 crore for the quarter.

Lupin: The pharma company has clocked a four-fold increase in consolidated profit at Rs 613.1 crore for the quarter ended December FY24, against Rs 153.5 crore in the year-ago period, backed by growth across segments with US business growing 23.7 percent and India 13.4 percent. Revenue from operations jumped 20.2 percent YoY to Rs 5,197.4 crore for the quarter.

SJVN: The company has received the Letter of Intent (LOI) from Gujarat Urja Vikas Nigam (GUVNL) for a 200 MW solar power project in GUVNL Phase XXII.

Apollo Tyres: The tyre manufacturing company has recorded consolidated profit at Rs 496.6 crore for the third quarter of FY24, growing 78.1 percent over a year-ago period despite muted topline, backed by healthy operating numbers. Revenue from operations during the same period grew by 2.7 percent to Rs 6,595.4 crore.

Mankind Pharma: Promoters Sheetal Arora, Arjun Juneja and Puja Juneja have decided to sell a combined stake of 1.62 percent in Mankind to comply with the requirements of minimum public shareholding. A block deal of around Rs 1,330 crore has been launched for the above divestment at a floor price of Rs 2,050 per share, sources told Moneycontrol on the condition of anonymity.

Foreign institutional investors (FIIs) net sold shares worth Rs 1,691.02 crore, while domestic institutional investors (DIIs) purchased Rs 327.73 crore worth of stocks on February 7, provisional data from the NSE showed.

The NSE has added Balrampur Chini Mills, Delta Corp, and SAIL to the F&O ban list for February 8, while retaining Ashok Leyland, Hindustan Copper, India Cements, Indus Towers, National Aluminium Company, UPL and Zee Entertainment Enterprises to the said list.

Securities banned under the F&O segment include companies where derivative contracts cross 95 percent of the market-wide position limit.