Trade Setup For Thursday; Key Factors To Know Before Market Open; 3 Stocks To Buy

Indian market is likely to open in red on Thursday tracking the downside trend of global cues alongside severe escalation of the war in the Middle East. In the early deals, Gift Nifty traded lower, while Asian shares slipped on the backdrop of multi-year high surge in treasuries, however, contracts in US equities were muted. Also, US stocks toppled over night with earnings season taking limelight as well.

The sentiment in domestic equities is likely to be under pressure, as long as Nifty 50 trades below 19,800 levels. The benchmark could slip below 19,600, however a decisive move above 19,850 may take the index to over 20,000 psychological mark.

At home, traders are likely to pay attention to Q2 earnings season, global trends and geopolitical tensions. Major Q2 results especially in the FMCG sector are scheduled on October 19th such as Nestle, ITC, and Hindustan Unilever among others. While stocks like Bandhan Bank, IndusInd Bank, LTIMindtree, Wipro, Persistent Systems and UTI AMC will be in focus after their Q2 earnings which were announced yesterday.

Yesterday, Sensex erased its 66,000 mark and ended at 65,877.02, down by 551.07 points or 0.83%, while Nifty 50 ended at 19,671.10, lower by 140.40 points or 0.71%. Bank Nifty also plunged by 520.80 points or 1.17% to settle at 43,888.70. Broad-based selling was seen across sectoral indices with banking, consumer durables, oil & gas, financials, and IT stocks weighing on the bearish sentiment.

Talking about the October 18th performance, Vinod Nair, Head of Research at Geojit Financial Services said, "Profit booking ensued in Indian markets, spurred by weak global sentiments and escalating Middle East tensions. A sudden rise in the tension has led to instability in energy prices; Brent prices rapidly rose above $92.5 by the day's closing time. While the US bond yields was cautiously placed, awaiting the FED chair's speech. The initial Q2 earnings disappointments by the IT & financials sector may have prompted attention in the domestic markets. All these all factors are presumed to be a knee jerk reaction as the total outlook on domestic market is stable, underpinned by healthy Q2 result forecast and favourable fiscal position."

Day Trading Guide For Thursday:

In the early trade of Thursday, Gift Nifty traded at 19,735.5 down by 54 points or 0.27%. The index opened at 19,789.5, and ranged between 19,959.0 and 19,735.5.

According to Prashanth Tapse, Senior VP (Research), Mehta Equities said, nervousness remained high amidst deepening Middle-East tensions, as Israel-Palestine conflict deepens. Other negative factors such as Uninspiring Q2 from corporate India Inc, the 10-year US Treasury yields spiking to 4.85%, rising expectations of one more interest rate increase from the Fed, and anxiety ahead of Powells Thursday's speech continue to weigh on the sentiment. Technically, Nifty's biggest support is placed at the 19509 mark, while confirmation of strength for the index can be seen once it surpasses the 19887 mark hurdle.

On October 19th, Shiju Koothupalakkal - Technical Research Analyst, Prabhudas Lilladher expects the Nifty Spot Index to have support between 19,500/19,450, while resistance is seen between 19,800/19,850. For Bank Nifty, she sees the support level ranging from 43,500 to 43,450 and resisting around 44,200/44,250 levels.

To investors, Ajit Mishra, SVP - Technical Research, Religare Broking, said, "Fresh weakness in banking and financial majors combined with a downtick in other heavyweights like Reliance is pointing towards further slide. On the index front, a decline below 19,600 in Nifty would again turn the bias on the negative side. We suggest maintaining hedged positions and advise keeping a check on position size citing the prevailing choppiness."

Intraday Stocks To Buy On Wednesday:

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

1. Bajaj Consumer: Buy at Rs 242.90 with a stop loss of Rs 238 for a target price of Rs 194.

2. Dhampur Bio Organics: Buy at Rs 162.60 with a stop loss of Rs 160 for a target price of Rs 172.

3. JK Tyre: Buy at Rs 325 with a stop loss of Rs 320 for a target price of Rs 340.

Nifty Spot Index:

Rupak De, Senior Technical analyst at LKP Securities said, "Bears remain at the helm as the Nifty witnessed selling pressure throughout the day. The Nifty found resistance at 19,850, which led to a fall towards 19,650. Going forward, the index may witness a range-bound move until it breaks out in either direction. A fall below 19,650 might give bears more strength and the Nifty might fall down towards 19,250. On the higher end, a decisive move above 19,850 might open the way towards 20,200."

Technically, Shrikant Chouhan, Head of Research (Retail), Kotak Securities Ltd said, the Nifty faced resistance near 19850 level and corrected sharply. It has now formed double top formation on daily and intraday charts and bearish candle on daily charts, which is indicating further weakness from the current levels. As long as the index is trading below 19800, the weak sentiment is likely to continue and could slip till 19600-19575. On the flip side, a minor pullback rally is possible if the index surpasses the intraday resistance of 19720, and above the same, we could see a one quick intraday rally till 19780."

Bank Nifty Spot Index:

On Bank Nifty, Kunal Shah, Senior Technical and derivative analyst at LKP said, "The Bank Nifty index experienced a bearish phase, encountering strong resistance at 44500, where the highest open interest is concentrated. The weak undertone in the market suggests a preference for selling on price rallies, and a breach of the 43800 support level is expected to lead to further selling pressure. The index's position below the 20DMA reinforces the bearish sentiment in the near term."

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.