Trade Setup For April 18: Nifty, Sensex Outlook Remains Weak But Near-Term Respite Likely
Stocks indices in the Asia-Pacific region were trading mixed even as its Wall Street peers extended losses for the fourth consecutive session. Analysts suggest scrip-specific trades.
Though the outlook on the Indian stock markets is weak, there is a possibility of a near-term respite, and as such, analysts suggest entering into scrip-specific trades.
The NSE Nifty 50 is getting a bit oversold on the intraday charts, indicating the possibility of a near-term respite, according to Hemen Kapadia, senior vice president of institutional equity at KR Choksey Stocks & Securities. But the overall outlook remains negative this time around; even the weekly picture has turned corrective, Kapadia said. "It would be better to be scrip-specific and trade carefully."
The put-call ratio is 0.76, and the positive breadth suggests some bottoming-out options. The weekly options data suggests that the support is in the range of 22,000–21,950. Meanwhile, the weakness in information technology stocks on Tuesday shows the vulnerability of the sector to bad news.
Weak global cues are largely weighing on the sentiment and this trend may continue, with an intermediate rebound, Ajit Mishra, senior vice president, research, Religare Broking Ltd., said. "We reiterate our view to Nifty to find support around the 22,000-22,150 zone and are likely to face a hurdle around 22,350 first."
Trading with a stock-specific approach could be a better trading strategy for the near term, cautioned Ruchit Jain, lead research, 5paisa.com.
On the options front, the weekly data hints at support in the range of 22,000-21,950, which also coincides with a rising trendline support, Jain said. "Only if this support is breached, then one can expect correction towards the 89 DEMA, which is placed around 21,750." However, as the hourly readings are oversold and the market breadth was positive, there could be a pullback move in the index towards 22400, he said.
The GIFT Nifty was trading 30.5 points or 0.14% down at 22,123.00.
FII And DII Activity
Overseas investors stayed net sellers on Tuesday for the third consecutive session.
Foreign portfolio investors sold stocks worth Rs 4,468.09 crore and domestic institutional investors remained net buyers for the sixth session and mopped up equities worth Rs 2,040.38 crore, according to provisional data from the National Stock Exchange.
Markets On Tuesday
India's benchmark stock indices extended losses for the third consecutive session on Tuesday as geopolitical concerns weighed on investor sentiments. The indices were dragged by banks and information technology stocks, especially Infosys Ltd. and ICICI Bank Ltd.
The NSE Nifty 50 settled 124.6 points or 0.56%, lower at 22,147.9 and the S&P BSE Sensex declined 456.1 points or 0.62%, to end at 72,943.68.
The Nifty hit an intraday low of 22,079.49, and the Sensex touched 72,685.03 earlier in the session.
The broader markets outperformed the benchmark indices. The BSE MidCap ended 0.20% higher and the SmallCap settled 0.58% higher.
On the BSE, 10 sectors declined and 10 advanced out of 20. The BSE IT sector was the worst-performing sector and the oil and gas sector emerged as the top-performing sector.
The market breadth was skewed in favour of the buyers as 2,256 stocks advanced, 1,565 declined and 112 remained unchanged on the BSE.
Major Stocks In News
One 97 Communications: Paytm has refuted reports on the deferral of the licence application of Paytm Payment Services. The company has not received any communication suggesting a deferral or penalties with regard to Paytm Payment Services licence application.
Vodafone Idea: The company successfully closed the anchor book allocation of 490 crore equity shares at Rs 11 per share for its upcoming public offer. Anchor investors have bought 491 crore shares at Rs 11 each. GQG has invested Rs 1,348 crore, Fidelity Rs 774 crore, and Redwheel Funds has put in Rs 281 crore.
Infosys: The company announced a successful collaboration with Proximus, Belgium’s leading digital services and communications solutions provider, to standardise its existing processes on the ServiceNow platform and transform its customer service management operations.
Earnings in Focus
Infosys, Bajaj Auto, HDFC Life Insurance, ICICI Securities, Mastek, National Standard (India), Network18 Media and Investments, Oriental Hotels, Swaraj Engines, TV18 Broadcast, Accelya Solutions India.
Top Brokerage Calls
Morgan Stanley On ONGC
Morgan Stanley maintains 'overweight' on ONGC at target price of Rs 304 apiece, implying a 7% upside.
ONGC's outperformance is likely to continue with improved capital allocation.
Stable regulations to support 18-20% return on equity.
Slow ramp-up in domestic production by 2024 flagged with upside from improving earnings.
ONGC provides stable cash flow.
Citi On HDFC Life Insurance
Citi Research upgrades HDFC Life Insurance to 'buy' from 'neutral'.
Expects 25-35% YoY overall APE growth in Q4.
Has underperformed ICICI Prudential Life Insurance Co., Max Financial Services Ltd., SBI Life Insurance Co. and Nifty 50 by 22%, 45%, 13% and 10% in one year.
Expect company's efforts to strengthen its agency base in FY24.
Global Cues
Stocks indices in the Asia-Pacific region were trading mixed even as its Wall Street peers extended losses for the fourth consecutive session. Investors look forward earnings of big tech firms.
The Nikkei 225 was trading 130.19 points or 0.34% lower at 37,831.61, and the KOSPI index was trading 31.48 points or 1.22% higher at 2,615.66. The S&P ASX 200 was trading 27.50 points or 0.36% higher at 7,633.10 as of 06:26 a.m.
Taiwan Manufacturing Co., Tokyo Electron Ltd. will be reporting its quarterly results on Thursday. Domestic tech major, Infosys Ltd. will also report its earnings.
The U.S. bond market remained under pressure, with traders sifting through a slew of remarks from Federal Reserve speakers on speculation that policymakers will be in no rush to cut rates, Bloomberg reported.
The S&P 500 index and Nasdaq Composite fell by 0.58% and 1.15%, respectively, as of Wednesday. The Dow Jones Industrial Average declined by 0.12%.
Brent crude was trading 0.07% higher at $87.36 a barrel. Gold rose 0.37% to $2,369.67 an ounce.
Rupee Update
The Indian rupee recorded its lowest-ever closing level against the US dollar on Tuesday amid the heightened tensions in the Middle East and the greenback's strength weighing on the sentiment.
The local currency weakened nine paise to close at Rs 83.54 against the greenback.
