Trade Setup For Wednesday; Key Factors To Know Before Market Opens; Stocks To Buy Or Sell

Financial conundrum and global uncertainties have kept Indian markets on their toes amidst escalating war in the Middle East. However, on Wednesday, benchmarks Sensex and Nifty 50 are likely to open in green tracking positive trends of global cues as the focus shifts to corporate earnings. Some of the major companies to announce Q2 results on October 25th are Axis Bank, Tech Mahindra, Jubilant Foodworks and Indus Tower among others.

In the early trade, Gift Nifty traded in the green, ranging from 19,255.0 to 19,341.0 respectively.

The sentiment in domestic equities is likely to be volatile with the Q2 earnings report, geopolitical risk, crude oil prices, treasury yields, and economic data will have a major impact. Nifty 50 is expected to pull back under 19,100 levels on Wednesday, however, the resistance is seen to be between 19,400 to 19,500. Whereas Bank Nifty is likely to fall under the 43,000 psychological mark.

On Monday, Sensex erased its psychological 65,000 mark to end at 64,571.88, nosediving by 825.74 points or 1.26%, while Nifty 50 slipped below the 19,300 mark, to settle at 19,281.75, shedding 260.90 points or 1.34% in the day. Indian markets were closed on Tuesday due to the celebration of the Dussehra festival.

Wall Street surged as traders' focus shifted to the quarterly earnings report while monitoring the performance of treasury yields.

Dow Jones Industrial Average gained 204.97 points or 0.62%, ending a four-consecutive day selling spree. While the S&P 500 index surged by 30.64 points or 0.73%. The tech-heavy Nasdaq Composite index outperformed its counterparts on October 24th, zooming 121.55 points or 0.93%.

Meanwhile, the MSCI All-World index was higher by 0.6%, marking its first daily rise since Oct. 17, furthermore, an index of Asia-Pacific shares excluding Japan inched above a one-year low. Broadly, the global market was up on Tuesday. However, the tension between Israel and Hamas war has made the Middle East a hot spot right now for influencing sentiments ahead along with a slew of economic data like US GDP data and Personal Consumption Expenditures (PCE) reports which are scheduled on Thursday.

Day Trading Guide For Wednesday:

On October 25th, Shiju Koothupalakkal - Technical Research Analyst, Prabhudas Lilladher expects the Nifty Spot Index to have support between 19,100/19,050, while resistance is seen between 19,450/19,500. For Bank Nifty, Koothupalakkal sees the support level ranging from 42,800 to 42,750 and resisting around 43,400/43,450 levels.

Prashanth Tapse, Senior VP (Research), Mehta Equities said, "Skeptical Foreign Institutional Investors (FIIs) are entrenched in the prevailing pessimism, while sectoral indices like Nifty Media, PSU Banks, and Metal faced significant declines. In a sea of red, Dalal Street offered little respite, with a challenging journey ahead. If today's setback is any indication, Wednesday's trading session for Nifty may also lack enthusiasm. It's worth noting that a display of strength will only be evident if Nifty manages to surpass its major resistance level in 19887. On the downside, Nifty's most robust support can be identified at 19501, with its 200-day moving average situated at 18594."

To investors, Ajit Mishra, SVP - Technical Research, Religare Broking said, "We feel the prevailing negativity is not going to subside anytime soon citing weak global cues and recent sell-off in the broader indices may further deteriorate the sentiment. On the index front, we are now eyeing 19,200 as the next crucial support. Amid all, we reiterate our view to limit trades and prefer hedged positions."

Intraday Stocks To Buy On Wednesday:

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

1. Aurobindo Pharma: Buy at Rs 874.80 with a stop loss of Rs 860 for a target price of Rs 907.

2. DLF: Sell at Rs 532.95 with a stop loss of Rs 540 for a target price of Rs 510.

3. JSW Steel: Buy at Rs 748.95 with a stop loss of Rs 760 for a target price of Rs 720.

Nifty Spot Index:

Rupak De, Senior Technical analyst at LKP Securities said, "The bears have maintained a strong grip on the index, resulting in significant selling pressure. This pressure led to a breakdown of the key support level at 19500. With the support at 19500 breached, the next significant support level was at 19200. If the index fails to sustain above this level, it may experience further declines toward the 19000-18800 range. The overall sentiment for the index remains bearish. As long as the index stays below the 19600 mark, the view remains bearish, and any upward movements are viewed as selling opportunities."

Technically, Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd said, the Nifty has formed a long bearish candle on daily charts which is indicating further weakness from the current levels. For day traders, 19400 would be the key resistance level, below which the index could slip till 19200-19175. On the other hand, above 19400 we could see a quick technical bounce back till 19450-19500."

Bank Nifty Spot Index:

Kunal Shah, Senior Technical and derivative analyst at LKP said, "The bears in the Bank Nifty decisively broke through the critical support level of 43,500, confirmed by a closing basis breach. The index continues to maintain a "sell on rise" approach, with formidable resistance observed at the 44,000 level, which coincides with the highest open interest on the call side. The next support on the downside is situated within the range of 42,800 to 42,600. If this level fails to hold, it may trigger further declines towards the 42,000 mark."

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.