Share Market Highlights 17 January 2023: Sensex slumps 1,600 pts, Nifty settles below 21,600 as banking stocks drag the market
● From Price Action Perspective:
Profit booking was visible from higher levels yesterday, and as a result, Nifty lost 0.29% yesterday primarily due to profit taking in IT sector, Reliance and Pharma. Banknifty, for a change, outpeformed the broader markets by closing flat largely in anticipation of decent numbers from HDFCBANK.
● Decoding Asset Relationships:
The Dollar index broke above its 13-day range, marking a potential change in sentiment in the currency basket as it approached 103.35 levels. US 10-year Bond yields too experienced uptick as it comfortably sustained above 4.05% in tandem with the dollar index.
Meanwhile, Brent Crude remains steady between $80-75 a barrel.
● Quick Check on Global Markets:
The S&P 500 opened with a downwards gap, experiencing price rejection near its life high zone closer to 4800. This is the second price rejection in a fortnight. Overall, Momentum is bullish, but for fresh momentum to emerge, it is essential for the index to surpass this level of 4800.
On the downside, the previous swing low of 4700-4690 zone could act as an important support.
● Key Nifty levels:
A single day of red in the market does not necessarily indicate a downtrend. The global cues from coming from the recovering dollar index and selling pressure in S&P 500 may gather like clouds on the horizon, but it may not indicate a signal to go aggressively short just yet. Rather, it could be a warning to decrease leveraged positions and hedge existing long positions. It also could signal an elongated period of consolidation going ahead into the quarterly numbers.
Going forward, from a short-term perspective, post the gap down, support is likely to be seen at 21700-21730 level & resistance on the upside will be closer to 22000-22030.
In case 21700 is breached,
Index could slide towards 21550-21510 zone on the downside.
Above 22030, the Index could resume its uptrend towards 22220-22280 zone.
However, since HDFCBANK Bank numbers are not on expected lines and ADR is trading with a deeper cut, expect the initial trading sentiment to get hit. Also, with IT too coming under pressure, we could witness some additional profit booking in the coming few sessions.
● OI data Interpretation for weekly series,
The open interest for January futures declined by 1.41% while the price fell 0.49%. This indicates partial, long unwinding of positions.
Nifty PCR_OI has cooled off to 1.11 levels.
Put writing seen in 22000 and 21900 strikes while 22100 as well as 22300/22500 calls have seen aggressive writing.
Overall, the range for the coming few sessions could be 21700 on the downside & 22150 on the upside.
● Key Bank Nifty Levels:
HDFC bank’s quarterly earnings were released yesterday, and what was notable was a prominent lack of expansion in Net Interest Margins. This is likely to put a damper in the banking sector as a whole as the markets digest this development.
Going forward, the zone of
48300-48250 is likely to act as a resistance & till this holds, index can experience profit booking upto 47600-47700 zone.
In case 47600 breaks, Index can retest its next support placed at 47100-47000.
Above 48300, Bank Nifty could witness a sharp extension of the rally towards 48600-48800.
For the next weekly Expiry,
In banknifty’s case, too, the near expiry experienced a decline of 0.48% while, on a cummulative basis, the futures OI surged by 0.34%, indicating opening up of minor short positions ahead of HDFCBANK’s numbers.
FIIs sold 2557 contracts when it came to banknifty.
Banknifty’s PCR is weaker at 0.92.
Significant Open Interest buildup is witnessed in 48300-48500 calls and 48100-48000 puts, implying a range of 47700 and 48600 for the coming few sessions.
However, in case BN slips below 47600-47650, Short-covering in Puts could be witnessed, which could put further pressure on the Index.
Next few sessions are going to be crucial for Bank Nifty as numbers of ICICIBANK and Kotak Bank are also scheduled to be released in next 3 days.
● Sectors & stocks in Momentum:
The most influential stocks whose quarterly earnings are due today are Asianpaints, ICICI Pru, LTIM and OFSS.
Oil and Gas constituents such as Ongc, Petronet, Gugasltd, Bpcl and Aegischem have formed favourable chart structures on daily as well as weekly timeframes.
From the broader market, bullish setups were observed in Titan, Itc, Tatamotors, Irfc, Sail, Bankindia, Biocon, Policybzr, Escorts, Nmdc, Lichsgdin, Cochinship, Amber, Intellect, Nationalum, Idbi, Idfc and RVNL.
● FII – DII data Synopsis
In the Cash Segment,
FIIs bought to the tune of 656.57 cr, while DIIs sold to the tune of 369.29 cr.
FIIs’ Long Short Ratio for Index Futures slightly weakened to 65.56 as on a net basis, they sold 2096 index futures.
On the stock futures front, FIIs have sold to the tune of 9797 contracts, while on the Options Front, FIIs bought 10850 call contracts and bought 271500 Put Option contracts. Buying of these put options could be a potential hedge against the overall existing Index Futures and Stock Futures Long positions.