Trade Setup For Thursday: Major Key Factors To Know Before The Opening Bell; Intraday Stocks To Buy

The Indian market is likely to face a cautious start on Thursday tracking a feeble sentiment of global cues as dollar strengthened amidst better-than-expected economic data that hinted at the case of elevated interest rates by US Federal Reserve for longer duration. In the early hours, Gift Nifty traded in positive note, while Asian markets dipped following sellings in Wall Street overnight. In the previous session, Sensex and Nifty 50 settled higher, driven by consumer durables, FMCG, and oil & gas stocks.

Gift Nifty, formerly known as SGX Nifty, traded at 19,627.5, slightly up by 2.5 points or 0.01% at 7.27 am, on Thursday. The index opened at 19,625 and traded in the range of intraday high and low of 19,646.5 to 19,622.5 respectively.

Thursday's Trade Guide:

Vaishali Parekh, Vice President - Technical Research, Prabhudas Lilladher expects the Nifty Spot Index to find support around 19,500/19,450 during Thursday's trade, while resistance is seen at 19,750/19,800. Further, the Bank Nifty spot index is likely to find support in the range of 44,200/44,150 and resistance is seen between 45,000/45,050.

In his technical view for Nifty 50, Rupak De, Senior Technical analyst at LKP Securities said, Nifty exhibited volatility but achieved a significant milestone by closing above 19600 for the first time in a while. The bullish crossover of the 21EMA and 55EMA has persisted, signaling an ongoing bullish trend. Additionally, a bullish crossover in the RSI highlights the index's strength. In the short term, Nifty may target levels of 19750 or even 20000. On the downside, key support rests at 19440, and the market is expected to maintain a buy-on-dips strategy as long as this support level holds.

While in case of Bank Nifty, Rupak De also said, the banking sector witnessed choppy trading as traders struggled to find direction, resulting in heightened volatility for the Bank Nifty index. The prevailing sentiment leans towards a negative-to-sideways bias, with the index closing below a crucial moving average. The RSI is on the verge of forming a bearish crossover, indicating potential weakness. In the short term, the index is expected to decline towards 44000, with resistance at 44600. Sustained trading above this level could propel the index towards 45000 and beyond. Selling on rallies seems to be the favored strategy for traders in the Bank Nifty, unless the index provides a clear and decisive breakout above the 45000 level.

To investors, Ajit Mishra, SVP - Technical Research, Religare Broking said, "Though we are seeing a rebound in the index, it lacks decisiveness due to the prevailing underperformance of the banking pack, which holds considerable weight. Besides, mixed cues from the global front are also weighing on the sentiment. We thus reiterate our view to stay focused on stock selection and avoid going overboard."

Stocks in news are -- Lupin, Tata Consultancy Services, Biocon, Responsive Industries, REC Ltd, Reliance Industries, and RHI Magnesita.

Intraday Stock Picks:

Parekh has recommended 3 stocks to buy on Thursday:

- Buy LT Foods at Rs 176 with a stop loss of Rs 173 for a target of Rs 190.

- Buy Britannia Industries at Rs 4569 with a stop loss of Rs 4500 for a target of Rs 4770.

- Buy Mahanagar Gas at Rs 1073.80 with a stop loss of Rs 1055 for a target of Rs 1150.

On September 6th, Sensex surged by 100.26 points or 0.15% to end at 65,880.52. After hitting new record highs of 32,182.66 and 38,142.34, the BSE Midcap and Smallcap index ended on a mixed note. Midcap index gained by 40.29 points, but smallcap index inched lower by 15.94 points. Of the total 3,791 stocks traded on BSE, 1,886 stocks were in positive, 1,766 stocks declined and 139 stocks were muted. 287 stocks touched new 52-week highs and 13 stocks struck their 52-week lows.

Meanwhile, Nifty 50 jumped by 36.15 points or 0.18% to settle at 19,611.05 on Wednesday.. Bank Nifty shed 123.05 points to end at 44,409.10. Broadly, banking and metal stocks were top laggards, while consumer durables, oil & gas and FMCG stocks lifted the overall performance.

Further, the foreign institutional investors (FIIs) were net sellers with an outflow of Rs 3,245.86 crore in Indian stocks on September 6. Similarly, domestic institutional investors (DIIs) also sold Rs 247.46 crore worth of shares.

Global Markets:

At the Asian front, shares traded lower on Thursday on expectations of further tightening in Fed policy, while dollar and treasury yields strengthened. Japan's Nikkei 225 dipped by 74.53 points, South Korea's KOSPI shed 0.82% and Australia's ASX 200 tumbled by 1.16%. Notably, the Hong Kong share also shed 0.8%, and China's mainboard Shanghai Composite Index plunged marginally.

As per Bloomberg's report, the dollar index rose to a fresh six-month high as investors increased expectations for the Fed to hike again this year. Treasury yields drifted higher across the curve Thursday, extending Wednesday increases that pushed two-year yields above 5%. Australian bond yields followed Thursday, edging higher.

Investors will keep a close watch on shares of Japan and China after both countries adopted measures to defend their currencies. Japan released a stern warning about yen depreciation on Wednesday, while China's central bank provided unprecedented guidance for stabilising the yuan against the US dollar.

With fear of further Fed rate hikes back to haunt, US stocks ended lower on Wednesday. The Dow Jones Industrial Average slipped by 198.78 points, the S&P 500 index shed 0.70%, and the tech-heavy Nasdaq Composite index dipped for the third day in a row by 1.06%.

The mood in global markets dampened after the Institute for Supply Management's US services index, stood at 54.4 in August, which is the highest monthly reading since February. This latest figure has also surpassed expectations. A reading above 50 signals growth.

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.