Trade Setup For Friday; RIL Q2, Global Trends Key Factors To Know Before Market Opens

Indian market is likely to see a positive start in Friday's opening bell as Gift Nifty traded higher along with Asian cues. However, Wall Street stumbled overnight owing to sharp selling in tech and tech-adjacent megacap shares, which may limit the sentiment of buying. Nevertheless, traders will react to US GDP data, while focusing on Q2 earnings data.

The sentiment is still expected to be broadly volatile. Nifty 50 which erased the 19,000 critical mark on Thursday, is expected to have support between 18,600 to 18,700, while resistance of the benchmark is likely to be around 18,900 to 19,000.

In the early trade, Gift Nifty traded in red at 18,975.5 down by 63 points or 0.33%. The index broadly ranged from 18,975.5 to 18,933.0 respectively.

Meanwhile, Asian shares rose while holding a cautious optimism of a rebound in Wall Street after solid tech earnings. US futures also advanced in the early trade. Japan's Nikkei 225 climbed 279.23 points or 0.96%, and South Korea's KOSPI index edged higher by 0.44%. Also, Australian shares inched up by 0.39%, while Hong Kong's Hang Seng outperformed with an upside of 1.23%, and that of China's mainboard SSE Composite was marginally up.

At Wall Street, overnight, soft earnings in tech biggies dragged the market, coupled with economic resiliency which is likely to keep higher interest rates longer than expected. The US economy accelerated at its fastest pace in nearly two years with GDP growth coming at 4.9% in the third quarter of 2023.

The Dow Jones Industrial Average dipped 0.76%, while the S&P 500 index shed 1.18%. It would be the tech-heavy index Nasdaq Composite that took the most hit with a downtrend of 1.76%.

Domestic equities continued to record a sharp selloff on Thursday with Sensex and Nifty 50 falling below 64,000 and 19,000 psychological levels. The 30-scrip benchmark ended at 63,148.15, nosediving by 900.91 points or 1.41%, while Nifty 50 slipped by 264.90 points or 1.39% to settle at 18,857.25. Bank Nifty shed 551.85 points or 1.29% to end at 42,280.15.

Talking about yesterday's performance, Vinod Nair, Head of Research at Geojit Financial Services said, "Till date, the actual domestic Q2 results are below par in comparison to the excited earnings forecasted. Similar disappointments are visible in developed economies. A downgrade in earnings and valuation is arising due to the risk of further slowdown of the economy due to geopolitical and elevated interest rates. Also selling pressure intensified due to expiry-led volatility influencing investors to stay cautious."

Day Trading Guide For Thursday:

Reliance Industries' share price will be in focus as the company will deliver its Q2FY24 numbers along with subsidiaries Reliance Jio and Reliance Retail for the same quarter.

On October 27th, Shiju Koothupalakkal - Technical Research Analyst, Prabhudas Lilladher expects the Nifty Spot Index to have support between 18,700/18,650, while resistance is seen between 19,000/19,050. For Bank Nifty, Koothupalakkal sees the support level ranging from 41,800 to 41,750 and resisting around 42,700/42,750 levels.

To investors, Siddhartha Khemka, Head - of Retail Research, Motilal Oswal Financial Services said, "Given the global uncertainties, there could be higher volatility in the near term and thus giving long term investors an opportunity to accumulate quality stocks at lower levels. We suggest to make higher allocation towards large caps as valuations are comfortable along with steady growth prospects."

To investors, Ajit Mishra, SVP - Technical Research, Religare Broking said, "Nifty has reached closer to the crucial support zone of 18,800 i.e. long-term moving average (200 EMA) and might take a breather after the recent slide. However, pressure on the heavyweights across sectors may cap the rebound. We thus suggest continuing with the "sell on rise" approach and reiterate our preference for index majors over others."

Intraday Stocks To Buy On Friday:

Prabhudas Lilladher's technical analyst recommended buying three stocks during Friday's intraday trade. These are:

1. BHEL: Buy at Rs 117.85 with a stop loss of Rs 114 for a target price of Rs 125.

2. Hindustan Oil Exploration: Buy at Rs 162.70 with a stop loss of Rs 159 for a target price of Rs 169.

3. UPL: Sell at Rs 561 with a stop loss of Rs 573 for a target price of Rs 538.

Nifty Spot Index:

Rupak De, Senior Technical analyst at LKP Securities said, "Once again, bears remain at the helm as the Nifty slipped below 19,000 for the first time in four months, indicating a rising bearish condition. The bearish crossover in the momentum indicator also supports the negative momentum. In the current scenario, supports are appearing very fragile and vulnerable. Despite the recent sharp decline, further correction from the current level seems highly possible. Support on the lower end is visible at 18,600-18,645, while resistance is positioned at 18,950-19,000."

Technically, Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities, said, "a bearish candle on daily charts and weak intraday formation is indicating further weakness from the current levels. As long as the index is trading below 19000, the weak sentiment is likely to continue till 18800-18725 levels. On the flip side, one relief rally is possible only after the dismissal of 19000 and above the same, the index could move up till 19100-19150."

Bank Nifty Spot Index:

Kunal Shah, Senior Technical and derivative analyst at LKP said, "The Bank Nifty index experienced continued heavy selling, resulting in a 1.29% decline. It is currently trading below its 200-day Exponential Moving Average (200EMA) placed at 43,264. This situation maintains a bearish undertone. The next immediate support level on the downside is at 42,000, where fresh put writing is evident. A breach below this level could lead to further declines, potentially targeting the 41,500-41,200 range."

Rupee Outlook:

Anindya Banerjee, VP - Currency Derivatives & Interest Rate Derivatives at Kotak Securities:

USDINR spot closed 5 paise higher at 83.23, due to rise in the US bond yields ahead of the important GDP report from US. However, suspected intervention from the RBI once again capped its advance. We expect USDINR to continue to trade within a range of 83.00 and 83.50 on spot.

Disclaimer:

The recommendations made above are by market analysts and are not advised by either the author or Greynium Information Technologies. The author, 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.