The market snapped two-day downtrend and rebounded nicely on February 8 as traders digested the repo rate hike of 25 bps by the RBI's Monetary Policy Committee. The gains were led by technology, metal, pharma, and select banking & financial services, and auto stocks.
The BSE Sensex jumped 378 points to 60,664, while the Nifty50 rose 150 points to 17,872 and formed bullish candle on the daily charts with making higher high higher low formation, indicating positive mood among market participants.
"On daily chart, we observe that Nifty has bounced back smartly after finding support near the 200-day EMA (17,563). The index was finding resistance near the 20-day SMA (17,872), but is now on the verge of moving above it," said Subash Gangadharan, Senior Technical and Derivative Analyst at HDFC Securities.
With the bias positive, he expects Nifty to test 18,000 mark in the near term, with crucial supports to watch for weakness at 17,744-17,652.
Traders need to focus on stock-specific action to make money, the market expert advised.
The broader markets also traded in line with benchmark indices as the Nifty Midcap 100 and Smallcap 100 indices have gained 0.91 percent and 0.84 percent respectively, while the India VIX, the fear index, was down by 3.75 percent to 13.60 level, giving more comfort for bulls.
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 17,779, followed by 17,743, and 17,684. If the index moves up, the key resistance levels to watch out for are 17,897, followed by 17,934 and 17,993.
The Nifty Bank extended gains for yet another session, rising 47 points to 41,538 and formed Doji candlestick pattern on the daily charts, indicating indecisiveness among buyers and sellers about future market trend.
"The index faces stiff resistance at 42,000 where the highest open interest is built up on the Call side. The index needs to break this level decisively for resuming the uptrend," Kunal Shah, Senior Technical Analyst at LKP Securities said.
He feels the undertone remains bullish and advised that one should keep a buy-on-dip approach with immediate support at 41,300 level.
The important pivot level, which will act as crucial support for the index, is placed at 41,429, followed by 41,337 and 41,189. On the upside, key resistance levels are placed at 41,726, followed by 41,818, and 41,966.
On a weekly basis, we have seen the maximum Call open interest (OI) at 18,000 strike, with 1.14 crore contracts, which may be a crucial resistance level in coming sessions.
This is followed by an 18,100 strike, comprising 90.96 lakh contracts, and a 18,500 strike, where we have more than 64.93 lakh contracts.
Call writing was seen only at 18,100 strike, which added 30.39 lakh contracts amongst the 17,000-19,000 strikes.
We have seen Call unwinding in 17,800 strike, which shed 64.28 lakh contracts, followed by 18,600 strike, which shed 37.60 lakh contracts, and 18,500 strike, which shed 36.32 lakh contracts.
On a weekly basis, the maximum Put OI was seen at 17,800 strike, with 89.50 lakh contracts, which can be a crucial support level for coming sessions.
This is followed by the 17,700 strike, comprising 88.7 lakh contracts, and the 17,500 strike, where we have 86.44 lakh contracts.
Put writing was seen at 17,800 strike, which added 64.32 lakh contracts, followed by 17,600 strike, which added 35.03 lakh contracts, and 17,700 strike which added 31.13 lakh contracts.
Put unwinding was seen at 17,400 strike, which shed 75,700 contracts, followed by 18,300 strike, which shed 44,950 contracts, and 18,200 strike, which shed 42,400 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 Crompton Greaves Consumer Electricals, HCL Technologies, HDFC, Infosys, and Kotak Mahindra Bank, 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 72 stocks including Alkem Laboratories, Info Edge India, Coforge, City Union Bank, and Cummins India.
A decline in OI, along with a decrease in price, mostly indicates long unwinding. Based on the OI percentage, 12 stocks saw long unwinding, including Navin Fluorine International, Astral, Britannia Industries, Zydus Life Sciences, and Ambuja Cements.
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 28 stocks including ONGC, Hero MotoCorp, Crompton Greaves Consumer Electricals, SBI Card, and Dixon Technologies.
78 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 78 stocks were on the short-covering list, including SBI Life Insurance Company, Adani Enterprises, Bajaj Finance, LIC Housing Finance, and HDFC Life Insurance Company.
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Hindalco Industries, Hindustan Petroleum Corporation, Life Insurance Corporation of India, Lupin, Zomato, Adani Total Gas, Aurobindo Pharma, Bajaj Consumer Care, Bombay Dyeing & Manufacturing Company, Devyani International, Force Motors, General Insurance Corporation of India, Greaves Cotton, Hindustan Aeronautics, Indian Railway Catering and Tourism Corporation, Jet Airways, Kalpataru Power Transmission, MRF, Natco Pharma, Page Industries, Pfizer, Sapphire Foods India, Suzlon Energy, United Breweries, Ujjivan Financial Services, and Voltas will be in focus ahead of quarterly earnings on February 9.
Stocks in the news
Adani Power: The Adani Group company recorded consolidated profit at Rs 8.77 crore for quarter ended December FY23, down 96 percent compared to year-ago period impacted by significantly higher fuel cost. Consolidated revenue for the quarter at Rs 7,764.4 crore increased by 45 percent over a year-ago period, mainly due to greater regulatory claims, increased operating capacity, and improved tariff realization. At the operating level, EBITDA fell by 17 percent YoY to Rs 1,470 crore with margin down over 1,400 bps YoY for the quarter.
Gujarat Pipavav Port: The port services company clocked a 89 percent year-on-year increase in consolidated profit at Rs 84.4 crore for three-month period ended December FY23 despite higher input cost, driven by healthy topline as well as operating income. Revenue from operations grew 49 percent YoY to Rs 250.6 crore, while EBITDA at Rs 142 crore increased by 63.4 percent, with margin expansion of 512 bps compared to year-ago period.
RBL Bank: The Reserve Bank of India has approved the re-appointment of Rajeev Ahuja as Executive Director for three years effective from February 21 this year. Rajeev Ahuja will be designated as key managerial personnel of the bank.
Larsen & Toubro: Ministry of Defence has signed a contract with L&T for the procurement of 41 indigenous modular bridges, worth over Rs 2,585 crore, for the Corps of Engineers of Indian Army. A modular bridge is fabricated in modules that can be installed quickly in the field.
Techno Electric & Engineering Company: The company has sold/disposed off 37.50 MW of 111.90 MW of its wind power assets in Tamil Nadu for Rs 158.93 crore. It has entered into MoUs for the sale of another 71.40 MW. TECHNO had installed 111.90 MW wind power assets in the year 2011.
Trent: The retail company has reported nearly 20 percent year-on-year growth in consolidated profit at Rs 167 crore for three-month period ended December FY23. It registered the highest ever quarterly revenues at Rs 2,303.4 crore, up 54 percent YoY. At the operating level, EBITDA grew by 18.5 percent YoY to Rs 323.2 crore but margin fell by 415 bps YoY to 14.03 percent for the quarter given the higher expenses. Numbers are not comparable YoY as Q3FY22 had accounting for rent waivers and reversals relating to inventory provisioning.
Oberoi Realty: The Mumbai-based real estate company registered a 50.3 percent year-on-year growth in consolidated profit at Rs 702.6 crore for quarter ended December FY23 on healthy topline and operating performance. Consolidated revenue surged 96 percent YoY to Rs 1,630 crore for the quarter. On the operating front, EBITDA jumped 184 percent YoY to Rs 940.4 crore with margin expansion of 1,786 bps compared to year-ago period.
Cummins India: The diesel and natural gas engines manufacturer has recorded better than expected earnings on all fronts for Q3FY23 as profit grew by 49 percent YoY to Rs 360.14 crore and revenue increased by 25.7 percent to Rs 2,181 crore for the quarter. At the operating level, EBITDA jumped 52.4 percent YoY to Rs 412.2 crore with margin expansion of 331 bps compared to year-ago period. The company announced an interim dividend of Rs 12 per share for FY23.
Fund Flow
Foreign institutional investors (FII) sold shares worth Rs 736.82 crore, while domestic institutional investors (DII) purchased shares worth Rs 941.16 crore on February 8, as per provisional data available on the NSE.
Stocks under F&O ban on NSE
The National Stock Exchange has added Indiabulls Housing Finance and retained Ambuja Cements to its F&O ban list for February 9. 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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