Trade Setup For Monday: Q2 Results, Global Trends, Geopolitical RIsks Key Factors To Know Before Market Opens

Indian market is likely to be hesitant for a bullish sentiment in the opening bell of Monday amid weak global cues. Although, in the early trade, Gift Nifty traded in the green, Asian stocks are under pressure due to the slippery performance of Wall Street last week's Friday session amidst a spike in crude oil prices. Also, the escalating war between Israel-Hamas has kept investors cautious. Traders are likely to keep a focus on economic data along with Q2 earnings of major banks, auto, financials and oil companies. Nifty 50 is still seen to move towards the 20,000 mark today, while resistance is seen at 19,850.

Last week, after starting on a gloomier note, Sensex and Nifty 50 ended the overall trading sessions from October 9th to 13th broadly on a positive note. Sensex gained during the week by 566.47 points or 0.86%, while Nifty 50 outperformed with an upside of 244.15 points or 1.25%.

On Friday, last week, Sensex ended at 66,282.74, lower by 125.65 points or 0.19%. Nifty 50 closed at 19,751.05, down by 42.95 points or 0.22%. Bank Nifty slipped by 311.25 points or 0.70% to end at 44,287.95.

Talking about last week's performance, Vinod Nair, Head of Research at Geojit Financial Services said, "The Indian market rebound from the sluggish start, propelled by positive expectations on Q2 earnings and moderation in global bond yield despite concerns over the Middle East conflict continues to hover."

However, Nair added, "The release of higher-than-anticipated US inflation data and resulting increase in treasury yields marginally offset the positive trend by the end of the week. While domestic factors such as a significant drop in CPI data and impressive industrial production helped to sustain the broad optimism. Weak start to the result season by IT sector's subdued revenue guidance, combined with uptick in crude oil prices affected the broad market trend. On the other hand, the realty sector performed well, fuelled by significant project launches and an uptick in pre-sales, buoyed by the onset of the festive season."

Day Trading Guide For Monday:

At the time of writing, Gift Nifty traded at 19,726, up by 25.5 points or 0.13%. The index opened at 19,700.5 and traded in the range of 19,739.5 to 19,678.0 respectively.

Asian shares are broadly in the red with Japan's Nikkei 225 taking a massive hit by tumbling 1.6%. Apart from the Western market trends and tense Middle East situations, investors will also look forward to the Chinese economic data scheduled later in the week.

Hang Seng index dipped 0.4%, while China's mainboard SSE Composite Index shed 0.5%. South Korea's Kospi and Australia's ASX 200 also slipped by 0.6% and 0.3% respectively.

Meanwhile, last week, on Friday, Wall Street saw mixed performance with the Dow Jones Industrial Average gaining marginally while the S&P 500 and tech-heavy Nasdaq Composite Index down by 0.5% and 1.23% respectively. The US shares were split between higher-than-expected inflation data, sea-saw-like performance in treasury yields and Fed rate expectations against the backdrop of geopolitical tensions.

However, crude oil prices have boiled up by nearly 6% on October 13th, which would be its biggest single-day rally since early March. Also, the US dollar strengthened against a basket of world currencies, marking its 12th surge in the last 13 weeks.

Dr Joseph Thomas, Head of Research, at Emkay Wealth Management said, "The steady retail inflation in the US, the probability of further rate hikes in the US remaining active, and the ongoing geo-political tensions, are factors that may dampen the market sentiment in the coming weeks too. But the reality of a strong domestic economy supports equities, and therefore, in any corrective downward movements it affords a significant amount of protection."

For Indian equities, Nair said, "Investors will closely monitor the further commencement of the Q2 earnings season which has high expectations like sectors Auto, Finance and Oil & Gas."

On October 16th, Vaishali Parekh, Vice President - Technical Research, Prabhudas Lilladher expects the Nifty Spot Index to have support between 19,650/19,600, while resistance is seen between 19,900/19,950. For Bank Nifty, she sees the support level ranging from 44,000 to 43,950 and resisting around 44,700/44,750 levels.

Also, Amol Athawale, Vice President - of Technical Research, at Kotak Securities said, "While the market is already coping with global economic uncertainty, concerns over the flare-up in Israel-Palestine conflict has been making investors jittery. Investors are also worried about the persistent FII selling and the rising US dollar and treasury yields."

Furthermore, according to Ajit Mishra, SVP - Technical Research, Religare Broking, apart from earnings, global cues would continue to play a critical role in setting the direction of our markets. Among the key indices, the US benchmark, the Dow Jones Industrial Average (DJIA), tested a hurdle at 33,800 and couldn't surpass it. We need a decisive break above 34,200 for a steady recovery else the decline would resume.

To investors, Mishra said, "Nifty is currently hovering around the short-term average(20 EMA) but facing stiff resistance due to lack of participation from two key sectors viz. IT and banking. We doubt that it could make a meaningful recovery without their contribution as they combined hold nearly 50% weight in the index. At the same time, other sectors like auto, energy, pharma, realty and metal are showing resilience so traders should align their trades accordingly. Also, we suggest keeping a check on position size and overnight risk management as volatility will remain high. "

Intraday Stocks To Buy On Monday:

1. Container Corporation of India: Buy at Rs 713 with a stop loss of Rs 702 for a target price of Rs 755.

2. Varun Beverages: Buy at Rs 928.50 with a stop loss of Rs 914 for a target price of Rs 1,000.

3. Time Techno: Buy at Rs 150 with a stop loss of Rs 147 for a target price of Rs 162.

Nifty Spot Index:

Rupak De, Senior Technical analyst at LKP Securities said, "The bulls were able to protect the level of 19600 during the day, thanks to the strong open interest (OI) build-up at the 19,600 strike price by put writers. The strength may continue as long as the index remains above 19600. Only a decisive fall below 19600 might trigger serious long unwinding in the market, till then a buy-on-dips strategy to favour the market. On the higher end, resistance is visible at 19850; above 19850, the index might move towards 20000."

Bank Nifty Spot Index:

Bank Nifty from Kunal Shah, Senior Technical & Derivative analyst at LKP Securities said, "In the Bank Nifty index, the ongoing battle between the bulls and bears continued. Resistance is established at the 44,700 mark, while support lies at 44,000. The overall market sentiment remains bullish as long as the critical support at 44,000 holds, and a breach below this level, confirmed by a closing basis, may lead to renewed selling pressure. On the upside, a substantial resistance level is placed at 45,000, and a breakout beyond this point is likely to trigger significant short-covering."