Trade Setup For Wednesday; Key Factors To Know Before Markets Open; 3 Stocks To Buy

Indian market is likely to open between a muted to bearish tone on Wednesday as the war in the Middle East intensifies. In the early deals, Gift Nifty traded lower, while Asian shares were a mixed bag with Japanese underperforming. Also, US stocks settled mostly flat after retail sales data crushed expectations of a dovish stance anytime soon from the Fed and lifted merriness for treasury yields. The 'buy on dips' strategy continues for Nifty 50 as long as it remains above 19,550 levels, and on the higher end, the benchmark is expected to move upside between 20,000-20,200 hurdles.

At home, traders are likely to pay attention to Q2 earnings season, economic data, global trends and geopolitical tensions. Major Q2 results scheduled on October 18th are Bajaj Auto, Bandhan Bank, IndusInd Bank, LTIMindtree, Wipro, Persistent Systems and UTI AMC among others, while stocks like Bajaj Finance, L&T Technology Services, Happiest Minds, Tata Metaliks, and Tata Elxsi will be in focus after their Q2 earnings which were announced yesterday.

Yesterday, markets halted their three-days losing streak due to broad-based buying despite concerns over the Israel-Hamas conflict. Sensex closed at 66,428.09, up by 261.16 points or 0.39%, while Nifty 50 ended at 19,811.50, surging by 79.75 points or 0.4%. Bank Nifty also zoomed 183.60 points or 0.42% to settle at 44,409.50.

Talking about the October 17th performance, Vinod Nair, Head of Research at Geojit Financial Services said, "The market's gap-up opening today, offsetting the losses of the past three days, indicates an optimism over the ongoing Q2 earnings despite concerns about the Middle East and subdued start by the IT sector. The upward trend was broad-based with particular upside in the Banking, Oil & Gas and FMCG sectors. However, some profit-taking was evident as the day concluded. FIIs continue to withdraw funds due to the rise in US bond yields. An insight into the future direction of interest rates is expected from the Fed chair's upcoming speech on October 19th. While the market will also closely monitor the developments in the Israel- Hamas conflict, with a consensus emerging that the geopolitical risk will not elevate."

Day Trading Guide For Wednesday:

For today's trade, Prashanth Tapse, Senior VP (Research), Mehta Equities said, "All eyes will be on Federal Reserve Chair Jerome Powell who is also scheduled to speak on Thursday (October 19) for further insights into the central bank's next steps and guidance on US interest rate policies. Technically, while the market will waver and trade choppy, the biggest support for Nifty is placed at the 19509 mark while confirmation of strength is only above the 19887 mark."

On October 18th, Vaishali Parekh, Vice President - Technical Research, Prabhudas Lilladher expects the Nifty Spot Index to have support between 19,700/19,650, while resistance is seen between 19,950/20,000. For Bank Nifty, she sees the support level ranging from 44,000 to 43,950 and resisting around 44,700/44,750 levels.

To investors, Ajit Mishra, SVP - Technical Research, Religare Broking, said, "We reiterate our mildly bullish view on Nifty and suggest continuing with a "buy on dips" approach till it manages to hold 19,600. On the other hand, we are seeing a rise in volatility across sectors with the beginning of earnings so traders should keep a check on stock selection and risk management aspects.

Intraday Stocks To Buy On Wednesday:

Parekh recommended buying three stocks during Wednesday's intraday trade. These are:

1. Power Grid: Buy at Rs 207 with a stop loss of Rs 204 for a target price of Rs 217.

2. Hindustan Oil Exploration: Buy at Rs 178.45 with a stop loss of Rs 174 for a target price of Rs 194.

3. Paras Defence & Space Technologies: Buy at Rs 747.85 with a stop loss of Rs 735 for a target price of Rs 785.

Nifty Spot Index:

Rupak De, Senior Technical analyst at LKP Securities said, "The market started to gap up following strong global sentiment and has so far remained in strength. The short-term trend remains strong as the index sustains above critical moving averages on the daily timeframe. A "buy on dips" strategy is favoured as long as it remains above 19,550. On the higher end, it might move towards 20,000-20,200."

Technically, Shrikant Chouhan, Head of Research (Retail), Kotak Securities also said, that Nifty hovered between 19700 to 19780 and has formed an inside body candle formation which indicates incisiveness between the bulls and bears. For the bulls, 19800 would be the immediate breakout level, above the same the index could rally till 19850-19880. On the flip side, below 19700, the selling pressure is likely to accelerate and could retest the level of 19640-19620.

Bank Nifty Spot Index:

On Bank Nifty, Kunal Shah, Senior Technical and derivative analyst at LKP said, "The market witnessed a persistent struggle between the bulls and the bears, resulting in the index closing around the resistance level of 44500. This signifies ongoing uncertainty and indecision among market participants. The index is currently stuck within a broad trading range, with support around 44000 and resistance at 45000. This range-bound movement suggests a lack of a clear, sustained trend in either direction. Despite the sideways trading range, the overall sentiment within this range remains bullish. Investors are inclined to use dips in the market as buying opportunities, reflecting confidence in the potential for upward movements."