Trade Setup For Thursday; F&O Expiry, US GDP Key Factors To Know Before Market Opens

Indian market is likely to open in red on Thursday due to weak global cues amidst a rebound in interest rates, high tension in the Middle East and soft quarterly earnings of IT companies. Globally, investors will also eye on the US GDP data which is scheduled for later in the day. At home, the domestic market will also perform on the F&O expiry day.

The sentiment is expected to be broadly in red unless there is a boosting factor. The support for Nifty 50 is around 19,000, however, the possibility of the benchmark erasing this mark is also high due to volatility. Nevertheless, resistance could be seen in the range of 19,200 to 19,300.

Today, Adani shares will be in focus, coupled with Tech Mahindra, Axis Bank, Indus Tower and Sonata Software among others as they have declared their Q2 earnings. Meanwhile, ACC, Canara Bank, Colgate-Palmolive, Asian Paint, and Vodafone Idea will be in focus ahead of their quarterly results.

In the early trade, Gift Nifty traded in red at 19,129.5 down by 47 points or 0.25%. The index broadly ranged from 19,181.5 to 19,122.5 respectively.

Meanwhile, Asian shares traded on a bearish note with Japan's Nikkei 225 slumping by 1.6%, and South Korea's KOSPI index dipped 1.5%. Also, Australian shares shed 0.9%, while Hong Kong's Hang Seng and China's mainboard SSE Composite Index dived over 0.3% each. They tracked the downfall in Wall Street.

US stocks fell sharply on disappointing quarterly earnings of Google's parent Alphabet and higher interest rate scenario. S&P dropped below the 4,200 level for the first time since May.

Overnight, the Dow Jones Industrial Average dipped 105.45 points or 0.32%, while the S&P 500 index shed 60.91 points or 1.43%. It would be the tech-heavy index Nasdaq Composite that took the most hit with a downtrend of 318.65 points or 2.43% owing to soft earnings from IT biggies.

Domestic equities were in a bloodbath on Wednesday with Sensex and Nifty 50 struggling to float above 64,000 and 19,000 marks. The 30-scrip benchmark ended at 64,049.06, nosediving by 522.82 points or 0.81%, while Nifty 50 slipped by 159.60 points or 0.83% to settle at 19,122.15. Bank Nifty shed 319.20 points or 0.74% to end at 42,832.

Talking about yesterday's performance, Vinod Nair, Head of Research at Geojit Financial Services said, "Investor sentiment is on edge as tensions in West Asia continue to drag the market. Despite a drop in oil prices and an optimistic view of the progressing Q2 results season, investors took a cautious approach due to the expectation that a higher interest rate scenario would continue slowing future growth. However, a positive strategy is evident on large-cap stocks, amid growing geopolitical worries and valuation concerns in mid-and small-cap stocks, as overall earnings growth is being sustained."

Day Trading Guide For Thursday:

On October 26th, Shiju Koothupalakkal - Technical Research Analyst, Prabhudas Lilladher expects the Nifty Spot Index to have support between 18,950/18,900, while resistance is seen between 19,250/19,300. For Bank Nifty, Koothupalakkal sees the support level ranging from 42,500 to 42,450 and resisting around 43,200/43,250 levels.

Siddhartha Khemka, Head - of Retail Research, Motilal Oswal Financial Services said, "We expect Indian markets to remain volatile on the back of concerns over higher interest rates, ongoing Israel-Hamas war and mixed Q2 results. On the global front, investors will take cues from the ECB interest rate decision on Thursday. Also, US New Home Sales data will be released late Wednesday."

To investors, Ajit Mishra, SVP - Technical Research, Religare Broking said, "Nifty has breached the lower band i.e. 19,200 of the broadening formation and now the next crucial support comes at 200 EMA, which currently lies around 18,830 levels. And, it also coincides with the neckline (breakout) area of the previous consolidation range. Meanwhile, global cues and the scheduled expiry of October month derivatives contracts would add to the choppiness. Traders should align their positions accordingly and prefer index majors over others."

Intraday Stocks To Buy On Thursday:

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

1. National Aluminium: Buy at Rs 91.65 with a stop loss of Rs 89.50 for a target price of Rs 97.

2. Delhivery: Buy at Rs 420.95 with a stop loss of Rs 412 for a target price of Rs 440.

3. Snowman Logistics: Sell at Rs 48.30 with a stop loss of Rs 50 for a target price of Rs 44.

Nifty Spot Index:

Rupak De, Senior Technical analyst at LKP Securities said, "The Nifty has faced selling pressure for a second consecutive day, leading to a close below the crucial support level at 19,200. Furthermore, the index has closed below its significant moving averages, signifying a bearish trend. The immediate support stands at 19000, with the highest open interest in put option contracts, while resistance is expected in the range of 19,250-19,300, as indicated by substantial call writing during today's trading session.

Bank Nifty Spot Index:

Kunal Shah, Senior Technical and derivative analyst at LKP said, "The Bank Nifty bears maintained control, leading to a breach of the 43,000 support level. The overall market sentiment remains bearish, and a "sell on rise" strategy is advisable. Immediate resistance is seen at 43,500, and further selling pressure could potentially drive the index down to 42,000, a long-term support level."

F&O Expiry:

Avdhut Bagkar, Derivatives & Technical Analyst, at StoxBox:

Nifty and Nifty Bank must cross 19,350 and 43430, respectively, to hold a reversal for Thursday's session.

Conservative option traders must exercise caution, while aggressive behaviour may consider longs once successive intraday highs are exceeded.

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.