With the way the markets were selling off until 3 PM, it felt as though the familiar old script is playing out yet again as there has been no conviction at higher levels and key support levels were on the verge of being broken on the Nifty yet again.
However, the bulls live to fight another day after the last 30 minutes of the trading session, which brought about not just a 140 point recovery from the lows, but also ensured that the Nifty managed to close above the 22,800 mark.
While the Nifty did manage some recovery from the lows, the real pain stayed in the broader markets. The advance-decline ratio was a yawning gap in favour of the declines, 420 stocks on the Nifty 500 ended in the red, while 85 stocks on the Midcap index and 91 stocks on the Smallcap index ended with losses in mid-week trading.
The spotlight though, has been on the Jio Platforms IPO, which has already received hefty subscription in the first day of bidding, with bids worth nearly ₹70,000 crore already being placed. The subscription has been led by institutional investors with the portion reserved for them seeing overall subscription of nearly 10x already. Rest of the portions have also been fully subscribed, with the retail segment seeing near-full subscription as well.
As much as ₹1.76 lakh crore will re-enter the market system on Thursday as the four IPOs that closed for subscription on Monday, will see their refunds being processed to shareholders who did not receive an allotment. The refunds will include over ₹1.2 lakh crore from the QIB segment and over ₹15,000 crore from the retail segment.
Thursday’s session, apart from the second day of bidding for the Jio Platforms IPO, will also be the weekly expiry of the Sensex contracts. Amidst the broader market sell-off, earnings reactions will be important to watch in stocks like Eternal, M&M Financial, Indian Hotels, KEI Industries, PC Jewellers, and International Gemmological Institute.
The penultimate trading session of the week will also see results from a slew of broader market names, such as Colgate-Palmolive, HPCL, CreditAccess Grameen, NAM-India, Sagility, Swiggy, Cyient and many others.
With the Nifty managing to defend 22,800 on the downside, that will remain the most important level to watch for Thursday, followed by Wednesday’s low of 22,649. On the upside, any recovery towards the 23,000 mark will continue to find supply and selling pressure.
Nifty is placed at the edge of breaking below the support of previous broken resistance around 22,750 – 22,700 levels as per change in polarity principle. Further weakness below this support could drag Nifty down to the next lows of 22,300 – 22,200 in the near term. However, any bounce could find key resistance around 23,000 – 23,100 levels.NAGARAJ SHETTI, HDFC SECURITIES
The Nifty Bank closed below the 55,000 mark on Wednesday but that also managed a recovery of nearly 300 points from the lows of the day. Wednesday’s low of 54,696 will be an important level to watch on the downside, while a slip below that could expose the 54,500 level on the downside. The index has a very broad range as Wednesday’s high stands at 55,867.
Vatsal Bhuva of LKP Securities said that a close below the 55,000 mark for the Nifty Bank signals weakening momentum and the possibility of further downside in-line with the prevailing trend. He also sees 54,500 as an immediate support for the index, while 55,500 will act as a resistance. However, given the deteriorating price structure, he advises a sell-on-rallies approach, and advises reviewing the long positions if the index does not reclaim the mark of 55,000.
Immediate support for the Nifty Bank is placed at 54,700 levels, followed by 54,500, according to Om Mehra of SAMCO Securities, while on the upside, 55,200 and 55,500 are the key resistance zones.