Sensex, Nifty May Open In Red Amid Weak Global Cues, Options Expiry Day; HAL, L&T, Among 3 Stocks To Buy

Indian market is likely to open in red on Thursday tracking weak global cues. Also, Thursday will be the options expiry day. In early hours, Gift Nifty traded lower, hinting at a slippery opening for Sensex and Nifty 50, while the bearish tone of Asian counterparts was likely to act as a spoilsport. Overall, the market is expected to trade volatile. In the previous session, Sensex and Nifty 50 ended on a positive note owing to a mixed trend across sectoral indices. Smallcap stocks outperformed!

Gift Nifty, formerly known as SGX Nifty, traded at 19,396.5 down by 15.5 points or 0.08% at 6.41 am on Thursday. The index opened at 19,412 and traded in the range of 19,410 to 19,356 respectively. Gift Nifty is a dollar-denominated futures contract based on the Nifty 50 index and is traded on the NSE IFSC exchange.

Meanwhile, in the early Asian hours, stocks dived due to a sharp selloff in US stocks and bonds as traders reacted to the hawkish statement in FOMC minutes. The US Federal Reserve continues to see signs of inflation risk in the country hence signalling more rate hike possibilities.

Further reports stated that China's real estate problems are likely to be worse than the official data indicated as of now. So far, the country's retail gross sales, industrial output and funding data have missed on expectations, hinting at deeper troubles for the growth of the World's second-largest economy. Also, it is known that China's one leading shadow bank has delayed payments on several investment products, fuelling rare protests in Beijing. Recently, China's central bank trimmed key rates.

Hong Kong's Hang Seng index traded lower by 1.7%, while the mainboard Shanghai Composite index dipped by nearly a per cent. Japan's Nikkei 225, Australian ASX 200, and South Korea's KOSPI index also shed over 1% each. Also, US futures dipped in early Asian trading.

Overnight, Wall Street tumbled with heavyweights like Meta Platforms, Amazon, and Tesla diving more than 1.5% each. The Dow Jones Industrial Average index plunged 0.52%, while the S&P 500 index shed 0.8%, and the tech-heavy Nasdaq Composite Index plummeted by at least 1.2%, taking the worst hit.

At home, on Wednesday, Sensex ended at 65,539.42, up by 137.50 points or 0.21%, while Nifty 50 was up by 30.45 points or 0.16% to end at 19,465.00. BSE Midcap climbed by 76.11 points, while BSE Smallcap outperformed broader indices with 183.93 points upside. Metal, banking and financial services stocks were top laggards, while healthcare, IT, auto and capital goods stocks were top gainers.

On August 16 trading performance, Vinod Nair, Head of Research at Geojit Financial Services said, "The initial apprehension stemming from an above-expected surge in domestic CPI inflation, driven by higher food prices, induced volatility in the Indian market. However, the market found some relief as the likelihood of this inflation surge being transitory alleviated concerns, leading to a recovery in the latter part of the trading session. Moreover, as core inflation continued to moderate, the market did not anticipate a rate hike, although the possibility of an extended rate pause seemed more probable. Stronger-than-anticipated retail sales data in the US and concerns about further rating downgrades of US banks contributed to choppiness in Western markets, while Asian markets reacted to the rate cut initiated by the Chinese central bank."

Thursday Trade Guide:

Vaishali Parekh, Vice President - Technical Research, Prabhudas Lilladher expects the Nifty Spot Index to find support around 19,300/19,250 during Thursday's trade, while resistance is seen at 19,600/19,650. Further, the Bank Nifty spot index is likely to find support in the range of 43,600/43,550 and resistance is seen between 44,400/44,450.

Intraday Stock Picks:

Parekh has recommended 3 stocks to buy on Thursday:

- Buy L&T at Rs 2691 with a stoploss of Rs 2655 for a target 2800

- Buy Hindustan Aeronautics at Rs 3900 with a stoploss of Rs 3850 for a target 4020

- Buy NTPC at Rs 217.45 with a stoploss of Rs 215 for a target 225

Also, Ajit Mishra, SVP - Technical Research, Religare Broking said, "The recent move shows a tussle around 19,300 in Nifty and feeble global cues might deteriorate the sentiment ahead. In case of a rebound, the 19520-19650 zone would be hard to cross. We thus reiterate our view to keep a check on positions and maintain focus on risk management."

Further, Rupak De, Senior Technical analyst at LKP Securities said, "The short-term outlook remains feeble, given that the index concluded the session below the vital short-term moving average (21EMA). The Relative Strength Index (RSI) shows a bearish crossover, further amplifying the pessimistic sentiment. The prevailing trend will continue to lack strength as long as it maintains levels below 19521, where the 21EMA is situated. Looking downward, the initial support level is positioned at 19250."

Kunal Shah, Senior Technical and derivative analyst at LKP Securities on Bank Nifty said, "The index's potential to experience a pullback rally is contingent on maintaining this level above the 100DMA on a closing basis. The immediate obstacle for the index is situated around 44000. An upward breach beyond this level could validate a move towards 44300 or 44500 levels."

Disclaimer:

The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, znor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.