Trade Setup For Tuesday; Key Things To Know Before Markets Open; Stocks To Buy

Indian market is likely to witness a positive opening on Tuesday tracking uptrends in global shares. Also, Gift Nifty surged to near 19,400 levels. Wall Street ended on a bullish note as investors focused shifts on corporate earnings reports and decided to take a breath from tapping Treasury yields. Apart from this, crude oil prices retreated from their robust gains of last week, and the dollar faced volatility.

Traders are likely to keep a focus on economic data along with Q2 earnings of major banks, auto, financials and oil companies. Major Q2 results scheduled on October 17th are Bajaj Finance, Happiest Minds, ICICI Prudential, L&T Technology Services, Tata Elxsi and Tata Metaliks among others, while traders will react to Q2 earnings of Jio Financial Services, and HDFC Bank.

The strategy for Nifty 50 is 'buy on dips', however, if the benchmark breaks below 19,700 levels it may slip between 19,500 to 19,600 hurdles.

Yesterday, Sensex closed at 66,166.93, down by 115.81 points or 0.17%, while Nifty 50 ended at 19,731.75 lower by 19.30 points or 0.1%. Bank Nifty also shed 62.05 points or 0.14% to settle at 44,225.90. India's volatility index shot up over 5%. Stocks in IT, FMCG, media, pharma, realty, and private banks saw selling, however, the losses were offset by gains in PSU banks, consumer durables, metal and auto stocks.

Talking about the October 17th performance, Vinod Nair, Head of Research at Geojit Financial Services said, "Persistent geopolitical tensions continue to weigh down the sentiment on equity, yet the mid- and small-cap index witnessed bargain hunting ahead of festival-driven demand and optimistic Q2 result. If the oil price moves higher in a sustained manner, it may elevate yields and operation costs, potentially straining margins in H2FY24. As the earnings season gets into full swing, investors will be more inclined to take a bottom-up approach to restructure their portfolios."

Day Trading Guide For Tuesday:

At the time of writing, Gift Nifty traded at 19,830, up by 95 points or 0.48% in the early trade. The index opened at 19,735 and traded in the range of 19,839.5 to 19,678.0 respectively.

Meanwhile, overnight, Wall Street gained traction with the Dow Jones Industrial Average index zooming 314.25 points or 0.93%. The S&P 500 and tech-heavy Nasdaq Composite Index also rallied by 1% and 1.20%.

Furthermore, after surging nearly 6% during last week's Friday session -- the biggest single-day spike in six months --- the benchmark Brent crude slipped below $90.50 per barrel.

For today's trade, Prashanth Tapse, Senior VP (Research), Mehta Equities said, "If today's uninspiring session is any indication, then the market will waver and trade choppy in Tuesday's session as well. Technically, the confirmation of strength for Nifty only above its biggest hurdles at the 19887 mark, while the index has the biggest support at the 19509 mark."

On October 17th, Vaishali Parekh, Vice President - Technical Research, Prabhudas Lilladher expects the Nifty Spot Index to have support between 19,600/19,550, while resistance is seen between 19,900/19,950. For Bank Nifty, she sees the support level ranging from 43,900 to 43,850 and resisting around 19,900/19,950 levels.

To investors, Ajit Mishra, SVP - Technical Research, Religare Broking, said, "We feel the muted action may continue in the index until we see alignment between the Nifty and the banking index. However, there is no shortage of trading opportunities across sectors so participants should plan their positions accordingly."

Intraday Stocks To Buy On Tuesday:

1. VRL Logistics: Buy at Rs 671.95 with a stop loss of Rs 660 for a target price of Rs 707.

2. Samvardhana Motherson International: Buy at Rs 97.35 with a stop loss of Rs 95 for a target price of Rs 103.

3. Midhani: Buy at Rs 446.50 with a stop loss of Rs 440 for a target price of Rs 464.

Nifty Spot Index:

Rupak De, Senior Technical analyst at LKP Securities said, "The benchmark index remained sideways as market participants stayed on the sidelines ahead of the scheduled speech by the Fed Chairman on Thursday. Over the near term, the index may experience volatility, with support placed at 19,700. A drop below 19,700 may take the index toward the range of 19,600-19,550. However, the "buy on dips" strategy is expected to remain the preferred approach as long as it sustains above 19,550."

Technically, Shrikant Chouhan, Head of Research (Retail), Kotak Securities also said, that Nifty hovered between 19700 to 19780 and has formed an inside body candle formation which indicates incisiveness between the bulls and bears. For the bulls, 19800 would be the immediate breakout level, above the same the index could rally till 19850-19880. On the flip side, below 19700, the selling pressure is likely to accelerate and could retest the level of 19640-19620.

Bank Nifty Spot Index:

On Bank Nifty, Rupak De of LKP also said, "The Bank Nifty remained sideways as market participants stayed on the sidelines ahead of the scheduled Fed Chairman speech later this week. In the near term, weakness may persist in the banking sector as the index has stayed below the critical short-term moving average. Over the short term, the index might maintain a negative to sideways trend as long as it remains below 44,700. Support is situated at 44,000-43,800."