Though there was a formation of a bearish candlestick pattern, which resembles a Bearish Engulfing kind of pattern on the daily charts (not the exact one), the market is unlikely to see significant correction but the consolidation is expected to continue with support at the 21,500 mark and the hurdle on the higher side is at the 22,000 mark, experts said.
On February 5, the benchmark indices had a positive trade since the opening but the bears turned active in the last hour of trade and pushed the market down. The BSE Sensex was down 354 points at 71,731, while the Nifty 50 declined 82 points to 21,772.
"Smaller degree higher tops and bottoms continued in Nifty on the daily chart and current weakness could be in line with the new higher bottom formation for the market," Nagaraj Shetti, senior technical research analyst at HDFC Securities said.
He feels the present weakness is unlikely to damage the near-term uptrend status of the market. "One may expect chances of upside bounce from the lower levels. Immediate support be watched around the 21,600-21,500 levels," he said.
Meanwhile, Ruchit Jain, lead research at 5paisa.com advised traders to stay cautious and prefer profit booking on long positions. On the higher side, 21,950-22,000 will be seen as immediate resistance, he said.
The India VIX, the fear indicator, increased by 6.25 percent to 15.62, from 14.70 levels, indicating the volatility may increase.
We have collated 15 data points to help you spot profitable trades:
Key support and resistance levels on Nifty and Bank Nifty
The pivot point calculator indicates that the Nifty is likely to take immediate support at 21,730 followed by 21,674 and 21,584 levels, while on the higher side, it may see immediate resistance at 21,793, followed by 21,968 and 22,058 levels.
Meanwhile, on February 5, the Bank Nifty was also under pressure, falling 145 points to 45,826 and forming a bearish candlestick pattern on the daily charts.
The banking index witnessed follow-through selling pressure from the previous trading session. "It closed below the key averages indicating weakness. Overall, the Trend remains sideways and the range of consolidation is likely to be 45,000047,000," Nifty Outlook by 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 45,664 followed by 45,562 and 45,396 levels, while on the higher side, the index may see resistance at 45,865 followed by 46,098 and 46,263 levels.
As per the weekly options data, the 22,000 strike owned the maximum Call open interest with 72.95 lakh contracts, which can act as a key resistance level for the Nifty in the short term. It was followed by the 23,000 strike, which had 69.98 lakh contracts, while the 22,500 strike had 57.95 lakh contracts.
Meaningful Call writing was seen at the 21,900 strike, which added 30.32 lakh contracts followed by 22,000 and 22,500 strikes adding 28.11 lakh and 17.51 lakh contracts, respectively.
The maximum Call unwinding was at the 23,100 strike, which shed 1.52 lakh contracts followed by 22,200 and 21,400 strikes which shed 1.3 lakh and 53,850 contracts.
On the Put front, the maximum open interest was seen at 21,000 strike, which can act as a key support level for Nifty, with 64.34 lakh contracts. It was followed by 21,500 strike comprising 46.07 lakh contracts and then 21,700 strike with 40.7 lakh contracts.
Meaningful Put writing was at 20,500 strike, which added 10.47 lakh contracts, followed by 21,200 strike and 21,000 strike, which added 10.4 lakh contracts, and 7.59 lakh contracts.
Put unwinding was seen at 21,600 strike, which shed 13.82 lakh contracts, followed by 22,000 strike, which shed 3.12 lakh contracts, and 21,800 strike, which shed 2.7 lakh contracts.
Stocks with high delivery percentage
A high delivery percentage suggests that investors are showing interest in the stock. Pidilite Industries, Dr Lal PathLabs, ITC, Bharti Airtel and Godrej Consumer Products saw the highest delivery among the F&O stocks.
A long build-up was seen in 38 stocks, which included Ipca Laboratories, Indian Oil Corporation, Cummins India, Ashok Leyland and Bharat Forge. 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 Hindustan Copper, India Cements, Maruti Suzuki India, Bajaj Auto and Siemens. A decline in OI and price indicates long unwinding.
75 stocks see a short build-up
A short build-up was seen in 75 stocks including UPL, Zydus Lifesciences, Aurobindo Pharma, Shree Cement and Dr Lal PathLabs. An increase in OI along with a fall in price points to a build-up of short positions.
Based on the OI percentage, 30 stocks were on the short-covering list. This included Metropolis Healthcare, Steel Authority of India, BPCL, Petronet LNG and GMR Airports Infrastructure. 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, fell to 0.89 on February 5, compared to the 1.02 level in the previous session. The below 1 PCR indicates that the Call volumes are higher than the Put volumes, which generally indicates an increase in bullish sentiment.
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Stocks in the news
Bharti Airtel: The telecom operator has recorded a consolidated net profit of Rs 2,442.2 crore for the quarter ended December FY24, growing sharply by 82.2 percent over the previous quarter as the Q2FY24 profit was impacted by an exceptional loss of Rs 1,570.3 crore. Revenue from operations grew by 2.3 percent QoQ to Rs 37,900 crore.
Adani Total Gas: The Adani Group company has signed a mutual support agreement with Inox India (INOXCVA) to strengthen the LNG ecosystem in India. Under the said agreement, the company, and Inox India will collaborate for delivery of LNG & LCNG equipment and services.
Ashok Leyland: The commercial vehicle maker has registered a 60.5 percent on-year growth in net profit at Rs 580 crore for the quarter ended December FY24, beating analysts' estimates, backed by strong operating numbers. Revenue from operations grew by 2.7 percent YoY to Rs 9,273 crore for the quarter.
Tata Chemicals: The Tata Group company has reported consolidated profit at Rs 158 crore for quarter ended December FY24, falling sharply by 60 percent compared to the year-ago period, impacted by lower topline as well as disappointing operating numbers. Power & fuel and input costs remained lower YoY. Revenue from operations fell 10 percent YoY to Rs 3,730 crore for the quarter.
Ideaforge Technology: The unmanned aircraft systems maker has clocked a net profit of Rs 14.8 crore for the October-December period of FY24 against a loss of Rs 7.8 crore in the same period last year, boosted by healthy topline and operating numbers. Revenue from operations jumped significantly to Rs 90.9 crore for the quarter, from Rs 7.8 crore in the corresponding period last fiscal.
Life Insurance Corporation of India: The state-owned life insurance company said the board of directors will be meeting on February 8, to consider the unaudited financial results for the quarter and nine-month period ended on December 2023. Further, In the said meeting, the board may consider a proposal for the declaration of an interim dividend for FY24.
BLS E-Services: The business correspondent’s services provider is set to debut on the bourses on February 6. The final issue price has been fixed at Rs 135 per share.
Funds Flow (Rs crore)
Foreign institutional investors (FIIs) net bought shares worth Rs 518.88 crore, while domestic institutional investors (DIIs) sold Rs 1,188.68 crore worth of stocks on February 5, provisional data from the NSE showed.
Stocks under F&O ban on NSE
The NSE has added National Aluminium Company and UPL to the F&O ban list for February 6, while retaining Hindustan Copper, India Cements, Indus Towers, and Zee Entertainment Enterprises to the said list. SAIL was removed from the said list.
Securities banned under the F&O segment include companies where derivative contracts cross 95 percent of the market-wide position limit.
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