● From Price Action Perspective:
Weaker set of quarterly numbers from HDFCBANK, in addition to sharp spike in Dollar Index, has led to selling pressure on Bank Nifty, which ended 4.3% negative for the day. Nifty outperformed by falling 2.09% as the IT sector supported the index to an extent.
Extensive Delivery based selling pressure seen across HDFC Bank, ICICIBANK, Kotak Bank, Axisbank, and Federal Bank kept Banking Index under pressure throughout the day.
● 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 103.50 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:
Good Incoming Economic Data pertaining to an uptick in US Retail Sales did not impress the US Equity Markets as it pushes back the expectations of a near-term interest rate cut by the US Fed.
The S&P 500 experienced price rejection near its life high zone closer to 4800. 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 4630-4665 zone could act as an important support.
● Key Nifty levels:
Going forward, since Nifty has slipped below its 20 Day EMA placed at 21580, from a short-term perspective, next support is likely to be seen at 21300-21350 level & resistance on the upside will be closer to 21620-21650.
In case 21300 is breached,
Index could slide towards 21160-21080 zone on the downside.
Above 21650, the Index could resume its uptrend towards 21790-21850 zone.
● OI data Interpretation:
The cummulative futures open interest for the index declined by 7% while the price fell 2%, indicating long unwinding of positions.
Nifty PCR_OI has cooled off to 0.55 levels and is approaching oversold zones.
Put writing is seen in 21500 and 21400 strikes while 21600, as well as 21700 calls, have seen aggressive writing.
Overall, the range for the coming few sessions could be 21300 on the downside & 21700 on the upside.
● Key Bank Nifty Levels:
Going forward, the 50-day EMA zone of
46400-46500 is likely to act as a resistance & and until this holds, the index can experience further selling pressure upto 45600-45700 zone.
In case 45600 breaks, Index can retest its next support placed at 45200-45150.
Above 46500, Bank Nifty could witness a short covering rally towards 47000-47200.
Tracking the Open Interest Data,
On a cummulative basis, the futures OI surged by 28% while the price fell by 4.2%, indicating fresh short build up in the Banking Index.
Banknifty’s monthly series PCR is currently at 0.65.
Significant Open Interest buildup is witnessed in 46200-46500 calls and 46200-46000 puts, implying a range of 45400 and 46400 for the coming few sessions.
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 the coming 3 days.
● Sectors & stocks in Momentum:
The most influential stocks whose quarterly earnings are due today are Indusindbk, Polycab, and Tatacomm.
Railway stocks such as Rites, RVNL, IRCON and IRFC experienced buying with heavy volumes.
From the broader market, bullish setups were observed in HCLTECH, Hudco, IREDA, Minda Corp, BPCL, IOC, EMudhra, Hercules, KTKBank, LTTS, Mirza, Midhani and Speciality Restaurant.
● FII – DII data Synopsis:
In the Cash Segment,
FIIs sold to the tune of 10,578.13 cr while DIIs bought to the tune of 4,006.44 cr
FIIs’ Long Short Ratio for Index Futures worsened to 54.19 as on a net basis, they sold 58945 index futures.
On the stock futures front, FIIs have sold to the tune of 79504 contracts, while on the Options Front, FIIs sold 452583 call contracts and sold 417203 Put Option contracts.
The above data buildup surely indicates the unwinding of long positions by FIIs in Index and Stock Futures.