The largecaps are finally awake. Call it relief rally or just plain buying from lower levels, the moves seen on all of these larger names on Thursday made the market completely forget the fact that the breadth was awry and skewed towards the laggards.
The Nifty is well on course for its second straight weekly gain. The last time that happened? Last week of July and the first week of August. Then began the eight weeks of pain. There is still a lot to digest when it comes to newsflow and global cues as well. It would not be wrong to say that adverse global cues were the reason Indian largecaps rallied on Thursday. Else, the reaction to quarterly results during the Sensex weekly expiry were nothing much to write home about.
Nestle India, HDB Financial, BHEL, are case in point. Of course, for all such names, there were Tata Communications, HDFC AMC and Orient Electric as well. Apart from global cues, earnings remain the single most important market factor currently, although it takes a brief pause with fewer companies reporting on Friday compared to Thursday before the Super Saturday of banking results. The weak market breadth is something that the bulls would want addressed on Friday.
Wipro and Tech Mahindra will be the two major earnings reactions on Friday. 360 ONE WAM, Angel One, Jio Financial, Persistent Systems, IIFL Finance, IRFC, Sterling & Wilson, Metro Brands among others will also be reacting to their results.
Federal Bank will be the most important result of Friday’s trade, along with Bajaj Housing Finance, Urban Company, Crompton Greaves Consumer Electricals, LTM, Oberoi Realty, Ujjivan Small Finance Bank, Solara Active Pharma, will also be reporting their numbers for the September quarter.
With the global AI trade seeing some ferocious unwinding, the stocks linked to the trade are also witnessing profit booking of their own. GE Vernova T&D, Hitachi Energy India, CG Power, HFCL, Sterlite Tech have been under pressure through the week and in case that trend continues on Thursday, more pressure cannot be ruled out in this segment. Of course, a further sell-off in these stocks globally will continue to remain positive for Indian IT.
With the Nifty having crossed the 23,000 mark intraday, that will remain the most important level to track on the upside. Sustaining above those levels could trigger a further upmove towards the 23,200 mark. On the downside, with the index making higher lows, the 22,650 – 22,600 zone can act as an immediate support. The index needs to close above 22,520 for a weekly gain.
Shrikant Chouhan of Kotak Securities said that the intraday market outlook is positive and advises to buy on intraday dips and sell on rallies. He sees support for the Nifty at the 22,875 – 22,800 zone, while 23,100 – 23,175 on the upside will act as a hurdle. Sentiment could change if the Nifty falls below 22,800, he added.
The Nifty RSI is showing a bullish crossover, supported by positive divergence, indicating improving momentum, observed Vatsal Bhuva of LKP Securities. Sustained momentum can take the index to retest the 38.2% Fibonacci retracement level near 23,180. However, he advises caution as the index remains below its 50 and 200-Day Moving Average and is treating the current move as a relief rally till the time the index closes above its 50-DMA.
The Nifty Bank closed above the important 55,500 resistance level as largecap banks contributed to the 500-point upmove on Thursday. The index also briefly crossed the 56,000 mark but failed to sustain above that level as a steep fall in shares of Yes Bank weighed on the index, although the stock does not command a significant weightage on it. 56,000 on the upside remains the most important level to watch, while the bulls would be hopeful that 55,500 now turns out to be a support level.
The index needs to close above the 55,250 mark to report its third straight weekly advance.
“The 55,200 – 55,300 zone will act as immediate support. A breakdown below this range could drag the index towards 54,900. On the upside, 56,300 – 56,400 is the immediate resistance zone and a decisive move above it could trigger a fresh breakout towards 56,800,” noted Sudeep Shah of SBI Securities.