Trade Setup For Friday: Inflation Data, IT Stocks, Among Key Factors To Know Ahead Of Opening Bell

Indian market is likely to see a mixed trend in the opening bell of Friday, with Gift Nifty hinting for an upside, however, weak global cues likely to sour sentiments. Asian shares traded in red due to US inflation data which dulled dovish stance and end of rate-hike cycle hope. IT stocks will have the key focus with HCL Tech and Infosys posting steady Q2 results. During the day, Nifty still has the potential to propel to 20,000 mark, while support is expected around 19,500 levels. Treasury yields gained momentum and US market ended bearish.

In the early trade, Gift Nifty traded marginally up by 16.5 points or 0.08% to 19,691.5. The benchmark opened at 19,675.0 and ranged between 19,701.5 to 19,684.

Further, Asian stocks traded lower tracking the bearish trend of US stocks after inflation data escalated chances of rate hike ahead. Apart from this, continued weakness in Chinese economy added to woes.

Japan's Nikkei 225 dipped 81.29 points, while Hang Seng index took a massive hit by nosediving 1.89%. China's mainboard SSE Composite Index tumbled 0.62%, while South Korea's KOSPI index dipped 0.7%. Australia's ASX/200 index also shed 0.35%.

Overnight, Wall Street halted their gaining spree and entered the red zone with treasury yields climbing on fresh inflation data which rose by 0.4% in September, keeping rate hike probability very much on the cards in the coming policy. The 10-year benchmark bond yield jumped to touch 4.70%, while 2-year yield also traded higher to 5.06%.

The Dow Jones Industrial Average dipped by 173.73 points, while the S&P 500 plunged 0.62% and the tech-heavy Nasdaq Composite index also slid down by 0.63%.

On Thursday, Sensex ended at 66,408.39, down by 64.66 points or 0.10%, while Nifty slipped by 17.35 points or 0.09% to settle at 19,794. However, Bank Nifty gained by 82.30 points to end at 44,599.20. The markets saw broad-based buying across sectoral indices with media and oil & gas stocks outperforming. While IT stocks witnessed massive selling amidst major Q2 earnings like Infosys, Wipro and TCS.

On yesterday's performance, Vinod Nair, Head of Research at Geojit Financial Services said, " The underwhelming result of the IT major and its lacklustre near-term prospects exerted downward pressure on the IT sector. Nevertheless, the broad market exhibited strength, primarily in anticipation of healthy overall Q2 results led by expansion in India's operating profit as volume demand is sustained despite global slowdown. Global trend was positive attributable to the favourable UK GDP figures and anticipation of a moderation in US CPI inflation, which may influence the FED's future actions."

The spoilsport for the Indian market which has continued throughout the month would be foreign funds outflow and
Thursday witnessed similar trend. The Foreign institutional investors (FIIs) sold Rs 1,862.57 crore in Indian stocks, although, domestic institutional investors (DII) offset the impact of outflow from FIIs by becoming major net buyers with an inflow of Rs 1,532.08 crore.

Here is the Trade Setup for Thursday Of Indian Market:

Day Trading Guide For October 13th:

Vaishali Parekh, Vice President - Technical Research, Prabhudas Lilladher expects a support level in the range of 19,700/19,650 for Nifty 50 on Friday,however, resistance is factored around 19,550/20,000. While she sees Bank Nifty as having a support level of 44,300/44,250 with resistance around 45,000/45,050.

Meanwhile, Prashanth Tapse, Senior VP (Research), Mehta Equities said, "If today's uninspiring session is any indication, then Nifty will waver and trade choppy and rough in Friday's session too. Technically, Nifty would find strength only if it crosses its biggest hurdle of 19887 mark. Nifty's biggest support is placed at the 19509 mark."

To investors, Ajit Mishra, SVP - Technical Research, Religare Broking said, "We reiterate our mildly bullish view on the index and suggest continuing with a "buy on dips" approach till Nifty holds 19,500. However, traders should maintain extra caution on stock selection as volatility remains high during the earnings season. Besides, mixed global cues could also add to the choppiness."

Intraday Stocks Picks:

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

1. Castrol India: Buy at Rs 143.20 with a stop loss of Rs 141 for a target price of Rs 152.

2. Indraprastha Gas: Buy at Rs 478 with a stop loss of Rs 470 for a target price of Rs 507.

3. Radico Khaitan: Buy at Rs 1,257 with a stop loss of Rs 1240 for a target price of Rs 1330.

Nifty Spot Index Level:

Rupak De, Senior Technical analyst at LKP Securities said, that the Nifty remained in a range-bound pattern after a flat opening. Throughout the session, Nifty barely moved outside the previous day's range. Looking ahead, we can expect the market to continue this range-bound movement until Nifty makes a decisive breakout either above 19850 or below 19750. A clear breakout above 19850, it could potentially propel Nifty towards the 20000 level.

Bank Nifty Index Support Level:

Kunal Shah, Senior Technical and derivative analyst at LKP Securities said, the Bank Nifty index continued its consolidation phase, encountering resistance at 44,700 and support at 44,400. The overall market sentiment remains bullish, and any dips should be considered as opportunities to initiate fresh long positions. The target is 45000, where the highest open interest exists on the call side. A break above 44,700 is expected to accelerate upward momentum, driven by fresh short-covering activities.

Disclaimer:

The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor 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.