Trade Setup: Nifty Dances Through Gains & Losses As Samvat 2080 Comes To A Close, What Lies Ahead?

As Samvat 2080 draws to a close, the Indian stock markets on Dalal Street are engaged in a tense, back-and-forth tango. What should have been a time of festive cheer for investors has instead turned into a high-stakes game of volatility, with the Nifty making some gains only to give them back in subsequent sessions. The penultimate trading day of Samvat 2080 saw a lacklustre performance, dampening spirits for the bulls as Nifty ended the session on a down note.

This article examines how the Indian markets fared in the waning days of this trading year and analyzes the dynamics affecting the Nifty and Nifty Bank indices. It also delves into the broader implications for upcoming trading sessions, key stock performances, and the ripple effects across global markets as the world's leading economies reveal mixed economic cues.

In the last few trading sessions, the Nifty attempted a partial recovery, largely due to the resilience shown by the Nifty Bank. However, when Nifty Bank underperformed midweek, the main index found it hard to sustain its momentum. In what can be called a classic "one step forward, two steps back" situation, Nifty managed to nearly erase its intra-day losses on Wednesday but ended over 120 points lower, closing at the same level it opened at earlier this week.

Despite the recent downward trajectory, the Nifty remains set to close Samvat 2080 with an impressive gain of over 25%, marking one of the best trading years in recent memory. This achievement comes in the wake of a nearly 2,000-point correction from its record high levels seen earlier. The ongoing volatility has shown that while the markets can rally impressively, they are also subject to pullbacks when bearish sentiment takes hold.

New entrants to the Nifty, Trent and Bharat Electronics Limited (BEL), have emerged as some of the top performers in Samvat 2080, even though both have been trading on the index for just over a month. Trent has nearly tripled its value since joining the Nifty, while BEL has more than doubled. Their standout performances, despite the volatile market environment, have drawn the attention of investors looking for stocks with strong upward momentum and growth potential.

As these two companies continue to capture market interest, their stellar performances highlight the importance of robust fundamentals and growth trajectories that can withstand market oscillations. Both Trent and BEL exemplify how new entrants can add vibrancy to the Nifty by attracting fresh investments.

The Nifty managed to hold above its immediate support level of 24,300 on Wednesday, a threshold that market watchers consider essential as the monthly expiry session approached on Thursday. This 24,300 mark has become a crucial pivot point for traders and analysts.

Over the October series, the Nifty has declined by over 1,800 points, although it reached a record high at the start of the series. As earnings season temporarily cools due to the festival season, investors are eyeing support levels and market cues closely, preparing for what lies ahead as the next financial year kicks off.

Although the festive season may temper the frequency of corporate earnings reports, Wednesday evening brought a few key announcements that could impact stock performance today:

Larsen & Toubro (L&T): Reported strong quarterly results, with a revenue of Rs 61,554.6 crore. Its EBITDA stood at Rs 6,362 crore, and its EBITDA margin at 10.3%. L&T's performance reinforces its fiscal year 2025 guidance for order inflows and margin.

Tata Power: Posted a 5.8% year-over-year rise in net profit to Rs 926.5 crore, while EBITDA climbed 21.2% to Rs 3,745 crore.

Biocon: Reported a miss with net profit at Rs 27.1 crore versus the forecasted Rs 54.7 crore. Revenue also came in lower at Rs 3,590.4 crore against an estimate of Rs 3,660.1 crore.

DCM Shriram: Nearly doubled its net profit to Rs 63 crore from the previous year, while its revenue rose 11% to Rs 3,130 crore.

These results, particularly from L&T and Tata Power, add optimism to the market, providing select opportunities for investors amidst the broader market volatility.

Global Market Cues
While domestic institutions remained net buyers on Wednesday, foreign institutions continued to sell, suggesting a cautious outlook on India's markets as global factors weigh on sentiment. US markets closed lower midweek as earnings from tech giants like Meta Platforms and Microsoft missed expectations, and GDP growth came in slightly below forecasts at an annualized rate of 2.8%, falling short of the 3.1% consensus.

Treasury yields in the US climbed, reflecting uncertainty over the Federal Reserve's rate trajectory. The 10-year yield was up by two basis points, hovering around a three-month high of 4.28%. This uptick in yields indicates investors are wary of rate hikes potentially continuing into 2024.

The European markets closed lower as well, with the pan-European Stoxx 600 down by 1.2% due to weaker-than-expected corporate earnings and concerns over regional economic growth. Technology stocks in particular saw a slump.

F&O Market Trends
Ahead of Thursday's monthly expiry, F&O (Futures & Options) market indicators show significant buildup. The Nifty 50 saw a 10% rise in Open Interest across the series, with rollovers at 40%, signalling substantial investor interest. October contracts, set to expire, traded at a premium of 30.2 points, up from 10.85 earlier in the week. The Put-Call Ratio of the Nifty 50 fell to 0.91 from 1.02.

On the Nifty Bank front, the F&O series saw a 21% jump in Open Interest on Wednesday, even as the index shed 500 points, marking an end to its October F&O series on a negative note. The Nifty Bank fell nearly 2,500 points throughout the series, though it managed a close above 51,800.

Oil Market
Oil prices rebounded midweek after a surprise dip in US crude and gasoline inventories and speculation of an OPEC+ production delay. Brent crude rose by $1.43 to $72.55 per barrel, while West Texas Intermediate (WTI) crude gained $1.4, ending at $68.61. This upward trend in oil is a welcome development for energy stocks globally.

Meanwhile, Asia-Pacific markets opened to mixed reactions. Japan's Nikkei fell by 0.37% as investors awaited the Bank of Japan's rate decision. South Korea's Kospi led the losses with a 1.17% drop, primarily impacted by disappointing earnings from Samsung Electronics. In contrast, Hong Kong's Hang Seng index rose 0.6%.

As Samvat 2080 draws to a close, the Nifty's struggle to maintain gains reflects the current market dynamics, where resilience is often met with resistance. While the festive season and positive annual gains might offer some relief, global headwinds and local economic data will continue to impact investor sentiment.