Trade Setup: Nifty's Decline Continues Amidst IT Turmoil, F&O Shifts & Global Market Unease

The Nifty index witnessed a sharp decline of 600 points over three consecutive sessions, plummeting to levels last observed on March 27. This downturn marks the first instance of the index falling for three consecutive days in three months, indicative of a broader market apprehension. Despite crossing key support thresholds, heavyweight sectors have failed to buoy the index, exacerbating concerns among investors.

A contributing factor to the market's woes has been the resurgence of IT sector troubles, once considered a potential support. The absence of post-earnings bolstering from industry leaders like TCS, coupled with top-level departures at LTIMindtree and Wipro, has amplified pressure on the Nifty. All eyes now pivot to Infosys as it gears up to report its results, with investors anticipating insights into the company's performance and management's guidance for the fiscal year 2025.

Amidst the Nifty's downward spiral, glimmers of hope emerge from the broader market landscape. While the Midcap Index maintained stability, the Smallcap Index edged upward by over 0.5% on Tuesday. Sectors such as Defence, Pharma, and FMCG showcased resilience amidst the market downturn.

However, amidst these developments, the National Stock Exchange (NSE) introduced a new circular on Tuesday, mandating an additional exposure margin of 15% in the equity derivatives segment for securities where the top 10 clients collectively exceed 20% of the Market-wide Position Limit. This regulatory framework is set to take effect from April 26, post the expiry of April contracts, aiming to fortify risk management mechanisms within the derivatives market.

Internationally, global markets exhibited subdued activity on Tuesday night, with mixed performances across Asian markets on Wednesday morning. While Japanese equities faltered, Chinese markets showcased resilience, underscoring the diverse regional sentiments amidst prevailing uncertainties. Additionally, Thursday marks the weekly options expiry for Nifty contracts, adding further anticipation to market dynamics.

Foreign investors persisted as heavy sellers in the cash market on Tuesday, while domestic investors endeavoured to offset losses by net buying. Banking stocks, much like their IT counterparts, failed to provide substantial support to the Nifty, with the Nifty Bank witnessing a staggering decline of over 1,500 points in the last three trading sessions. HDFC Bank emerged as a standout performer amidst the bleak market sentiment, albeit insufficient to counteract selling pressures plaguing other prominent banking stocks.

Analyzing the Futures and Options (F&O) cues, Nifty 50's April futures witnessed a notable decline in Open Interest alongside a shift in trading premiums. Conversely, Nifty Bank's April futures experienced a marginal decrease in Open Interest. Notable F&O developments include Vodafone Idea's return to the F&O ban list ahead of its FPO opening, while Exide Industries and India Cements exit the ban. Several prominent stocks including Balrampur Chini, Bandhan Bank, GNFC, Hindustan Copper, Metropolis, NALCO, Piramal Enterprises, SAIL, and Zee Entertainment continue to remain in the F&O ban.

Ahead of Thursday's weekly options expiry, Open Interest additions were observed on the Call side for Nifty 50 strikes between 22,200 and 22,500, while corresponding additions were noted on the Put side for strikes between 21,900 and 22,150. However, the 22,200 strikes witnessed a reduction in Open Interest, signalling market participants' cautious outlook amidst prevailing uncertainties.

As the market gears up for Thursday's trading session, several stocks are poised to capture investors' attention with significant developments on the horizon. From high-stakes corporate manoeuvres to regulatory nods and financial performances, here's a roundup of the stocks to watch out for:

Vodafone Idea (Vi): With its Rs 18,000 crore Follow-on Public Offering (FPO) opening for subscription, Vi takes centre stage in the market arena. Notable investors including GQG, Fidelity Funds, and UBS have already shown interest, as reflected in the company's successful raising of nearly Rs 6,000 crore through anchor investors.

Infosys: The tech giant partners with Belgium's Proximus for customer service management operations, diversifying its global footprint. Furthermore, all eyes are on Infosys as it prepares to unveil its March quarter earnings post-market hours on Thursday.

Zee Entertainment: In a strategic move, Zee withdraws its merger implementation application from the National Company Law Tribunal (NCLT) against Sony. Instead, the company opts to intensify its claims against Sony in arbitration proceedings at the Singapore International Arbitration Center.

Biocon: Securing a licensing and supply agreement with Brazil-based Biomm for the commercialization of Semaglutide (gOzempic), Biocon expands its footprint in the global diabetes management market.

Piramal Pharma: A significant milestone is achieved as the USFDA issues an Establishment Inspection Report (EIR) for Piramal's Riverview manufacturing facility, following a successful inspection in February 2024.

Angel One: The financial services firm reports robust financial performance for the March quarter, with a notable 64.3% surge in revenue to Rs 1,357.2 crore and a 27.3% increase in net profit to Rs 340 crore compared to the previous year. Despite a slight narrowing of EBITDA margin, the company exhibits resilience with a 37.2% rise in EBITDA to Rs 529.7 crore.

Shilpa Medicare: The pharmaceutical company receives a GMP certification for its Unit 4 in Jadcherla, Telangana, following a successful inspection by Austrian regulators.

Ambuja Cements: The Adani Group completes warrant subscription, boosting its stake in Ambuja to 70.3% from 63.2% and injecting an additional Rs 8,339 crore into the company. Ambuja sets ambitious goals, intending to double its capacity to 140 MTPA by 2028, signalling confidence in the long-term growth prospects of the cement industry.

Paytm: Responding to speculations, Paytm clarifies that it has not received any communication suggesting a deferral or penalties for Paytm Payment Services' license application, providing much-needed clarity to investors amidst regulatory uncertainties.

Brigade Enterprises: The real estate developer reports record pre-sales of Rs 6,013 crore for the financial year 2024, buoyed by strong demand in the residential segment. With average realizations witnessing a notable uptick and optimistic projections for the financial year 2025, Brigade Enterprises remains bullish on its growth trajectory.

Sunteck Realty: The real estate player reports a 26% year-on-year increase in pre-sales for the March quarter, reaching Rs 678 crore. Despite a slight decline in collections, Sunteck Realty demonstrates resilience with a 20% rise in full-year pre-sales, reflecting sustained demand in the real estate market.

Jubilant Pharmova: Achieving regulatory compliance milestones, Jubilant Pharmova receives a favourable determination from the USFDA for its Roorkee facility, indicating adherence to current Good Manufacturing Practices (cGMP).

Power Grid: Board approval for raising up to Rs 12,000 crore via bonds in the financial year 2025 signals Power Grid's strategic financing plans to support its ambitious growth initiatives and strengthen its position in the power transmission and distribution sector.

KIMS: A subsidiary of KIMS receives an income tax demand worth Rs 307 crore, adding to the company's financial obligations.

JSW Energy: JSW Energy's arm secures an arbitral tribunal's approval to recover Rs 120 crore from Tamil Nadu Generation and Distribution Corporation (TANGEDCO), with interest. The rejection of TANGEDCO's counterclaim underscores the company's determination to protect its interests and uphold contractual obligations.

As market turbulence persists, stock futures traded near the flatline on Wednesday evening, following a string of losses in major indices. The S&P 500 and the Nasdaq Composite logged their fourth consecutive day of declines, reflecting ongoing uncertainty and volatility in the market landscape.

Futures tied to the S&P 500 showed marginal gains of 0.04%, while Nasdaq 100 futures edged up by 0.1%. Dow Jones Industrial Average futures remained relatively unchanged, underscoring the cautious sentiment among investors.

Tech stocks faced headwinds on Wednesday, contributing to the downward trajectory of the S&P 500 and the Nasdaq Composite. Nvidia, a prominent player in artificial intelligence, notably dragged both indexes lower with a nearly 4% decline. The Dow Jones Industrial Average also struggled, marking its seventh session of losses in the last eight trading days.

Meanwhile, US Treasury yields retreated as investors processed comments from Federal Reserve policymakers regarding the economic outlook and monetary policy stance. The yield on the benchmark 10-year Treasury fell by almost 8 basis points to 4.581%, while the 2-year Treasury yield dipped below the key 5% mark, standing at 4.928% after a decline of nearly 4 basis points.

In Europe, despite initial jitters stemming from remarks made by the head of the US Federal Reserve, regional stocks closed higher on Wednesday. The Stoxx 600 index ended the day with a modest 0.2% gain, with most sectors trading in positive territory. Notably, household goods stocks surged by 1.8%, while the tech sector faced a 2.6% decline.

Turning to Asia-Pacific markets, trading remained mixed on Thursday following the overnight losses witnessed on Wall Street. Australia's S&P/ASX 200 advanced by 0.45%, with investors awaiting the release of unemployment data. In contrast, Japan's Nikkei 225 slipped by 0.82%, extending its losing streak for the fourth consecutive day, while the broader Topix index declined by 0.38%.

South Korea's Kospi index rebounded from previous losses, posting a notable gain of 1.04%, while the small-cap Kosdaq index also surged by 1.16%. However, futures for Hong Kong's Hang Seng index indicated a weaker open compared to the previous close, standing at 16,211, signalling further volatility in the region.

Turning our focus to the domestic market, the GIFT Nifty was seen trading with a discount of more than 50 points from the Nifty Futures Tuesday close, indicating a start in the red for the Indian market.