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

The Indian market is likely to open in red on Tuesday tracking a bearish sentiment of global cues. In the early hours, Gift Nifty traded in red, while Asian markets slipped with the Hong Kong index recording massive selloffs. Trading in US stocks was closed on Monday, and hence traders observed China's attempts to revive its economic conundrums. In the previous session, Sensex and Nifty 50 settled higher as broad-based buying was seen across indices with strong buying in metal, and IT stocks.

Gift Nifty, formerly known as SGX Nifty, traded at 19,593.5, down by 5.5 points or 0.03% at 7.30 am, on Tuesday. The index opened at 19,599 and traded in the range of intraday high and low of 19,611 to 19,573.5 respectively.

Further, Asian shares traded broadly lower as the focus shifted to China's efforts to tackle its economic woes after the US market was closed for the Labor Day holiday. Japan's Nikkei 225 dipped 42.80 points, South Korea's KOSPI index inched lower as well and Australia's ASX 200 tumbled by 0.54%.

Reserve Bank of Australia is set to announce monetary policy outcomes on Tuesday where many expect a status quo in key rates for the third straight month. Also, China's PMI and services data is scheduled to be released later in the day.

Notably, the Hong Kong share took a massive hit, nosediving by 225.22 points or 1,2%, and China's mainboard Shanghai Composite index also plunged by 0.5%.

Bloomberg reported that traders will be monitoring if Hong Kong and mainland China stock markets will be able to sustain Monday's advances. The country's beleaguered property sector is getting a boost from the announcement that down-payment thresholds across the nation would be lowered, with Shanghai and Beijing seen as benefiting the most.

Also, a Bloomberg gauge of Chinese developers shot up by at least 8.7% on Monday, after a weekend surge in home sales in two of its biggest cities, improved sentiments.

Trading in the US market was closed on the occasion of Labor Day on Monday.

Meanwhile, the US dollar index stood firm near 104.2 on Tuesday, while the Aussi weakened by 0.5% to $0.6431 ahead of the central bank's rates decision. Further, the euro picked up from its recent lows and traded at $1.0793 in early trading hours.

Treasuries were broadly mixed in early Tuesday after the cash market was shut on Monday. The Australian bonds inched lower, while 3-year notes edged up by 2 basis points. The US 10-year treasury yield was slightly up by 3 basis points to 4.20%.

Moving on, crude oil prices also saw mixed reactions as China's measures to lift its economy have reportedly offset supply cut expectations from major OPEC+ members such as Saudi Arabia and Russia. Brent crude futures for November shed 0.11% to $88.90 a barrel, however, the U.S. West Texas Intermediate crude (WTI) October futures jumped 0.39% to $85.88 per barrel.

At home, Sensex surged by 240.98 points or 0.37% to end at 65,628.14, while Nifty 50 jumped by 93.50 points or 0.48% to end at 19,528.80 on Monday. Bank Nifty gained by 142.20 points to 44,578.30. The BSE Midcap and Smallcap index outperformed by rising 300.44 points and 313.61 points respectively. Metal stocks outperformed their counterparts, with a strong upside of 613.92 points followed by IT stocks which zoomed by 553.63 points on BSE. Broad-based buying was seen across indices with the exceptions of consumer durables and FMCG stocks.

Tuesday's Trade Guide:

Vaishali Parekh, Vice President - Technical Research, Prabhudas Lilladher expects the Nifty Spot Index to find support around 19,400/19,350 during Tuesday's trade, while resistance is seen at 19,700/19,750. 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.

Intraday Stock Picks:

Parekh has recommended 3 stocks to buy on Tuesday:

- Buy L&T Finance at Rs 129.50 with a stop loss of Rs 127 for a target of Rs 136.

- Buy Kalpataru Project at Rs 681 with a stop loss of Rs 670 for a target of Rs 717.

- Buy Torrent Power at Rs 705 with a stop loss of Rs 694 for a target of Rs 740.

Also, Ajit Mishra, SVP - Technical Research, Religare Broking said, "Indications are favorable for further rebound as Nifty has surpassed a trend line resistance while holding the support zone of short-term average i.e. 20 EMA. However, a hurdle of around 19,650 may cap the upside and prompt some profit taking too. Amid all, we reiterate our view to focus on stock selection and preferring auto, IT and metal for long trades."

In his technical view for Nifty 50, Rupak De, Senior Technical analyst at LKP Securities said, Nifty continues to stay in the bullish territory as the index has maintained its position above the channel breakout level. The trend is expected to stay positive as long as it remains above 19,525. On the upside, the index could potentially extend its gains towards 19,750. Conversely, if it falls below 19,400, we may witness a period of consolidation.

Further, on Bank Nifty, Kunal Shah, Senior Technical & Derivative analyst at LKP Securities said that the index remains under bullish momentum, finding support within the 44300-44200 zone, which serves as a safety net for the bulls. The immediate obstacle on the upside is situated at the 44600-44650 zone. A successful breach above this resistance level would pave the way for further upward movement, potentially targeting the 45000 level, where a substantial amount of open interest exists on the call side, making it a key area to watch.

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.