Trade Setup: Will Nifty Continue To Be Shy Of 25,000 Milestone Or Are There Some Hopes Of Rally Today?

Tuesday's trading session for the Nifty felt closely mirroring Monday's activity. The Nifty opened strong and scaled higher, sparking hopes of hitting the 25,000 mark, only to be pulled back by a late-session sell-off. This left the index nearly where it started the day, reflecting the volatility and unpredictability of the market.

The weekly expiry of the Nifty Financial Services index played a crucial role in this repeated reversal. The index saw a sharp 250-point reversal from the day's high, dragging down the Nifty Bank and subsequently, the broader Nifty index. When analyzing the charts of these indices side by side, the similarity in their patterns is striking.

On Tuesday, the Nifty hit a high of 24,971, setting a new barrier for the index to cross as it moves into mid-week trading. Despite a trading range of 550 points over the last two sessions, the net gain was a mere three points. This sets the stage for Wednesday's trading, which not only marks the weekly expiry of the Nifty Bank but also the last trading day of July-a month that has seen the index gain 3.5%.

Wednesday promises to be a day heavily influenced by earnings reports. Several major companies, including Tata Consumer Products, Ajanta Pharma, Dixon Technologies, Indus Towers, Navin Fluorine, Torrent Power, and Macrotech Developers, will be reacting to their quarterly results.

Additionally, four Nifty 50 constituents-Coal India, Mahindra & Mahindra, Maruti Suzuki, and Tata Steel-are set to report their results on Wednesday. Broader market players like Adani Power, Ambuja Cements, Aster DM Healthcare, Bank of Baroda, BHEL, Deepak Fertilisers, Birlasoft, Godrej Properties, Mankind Pharma, Prestige Estates, and Zee Entertainment will also be in focus.

On Tuesday, foreign institutional investors (FIIs) were net sellers in the cash market, while domestic institutional investors (DIIs) continued their trend as net buyers.

The underperformance of the Nifty Bank will again be in the spotlight on Wednesday due to the weekly options expiry. This index has played a pivotal role in limiting the Nifty's gains throughout July. It led the resurgence on Friday and Monday, but the sell-off from higher levels on Tuesday dragged the Nifty down with it. The Nifty Bank reached a high of 51,957 on Tuesday but corrected over 500 points from those levels, echoing Monday's drop.

Nifty 50's August futures saw a 1.9% increase, adding 2.75 lakh shares in Open Interest on Tuesday. They are now trading at a premium of 71.8 points, slightly down from the previous 74.35 points. Conversely, Nifty Bank's August futures shed 13.4%, with 1.31 lakh shares in Open Interest on Tuesday. The Nifty 50's Put-Call Ratio (PCR) has risen to 1.23 from 1.14.

India Cements remains the sole stock in the F&O ban. For the Nifty 50's August 1 expiry, the Call strikes of 24,900 and 25,100 have seen an addition in Open Interest. On the Put side, strikes between 24,800 and 24,900 have also witnessed increased Open Interest.

As the market braces for another volatile session, investors and traders will keep a keen eye on the earnings reports and the performance of the Nifty Bank. The tug-of-war between foreign and domestic institutions, coupled with the patterns observed in the last two trading sessions, suggests that caution and strategy will be paramount in navigating the market.

As the market gears up for Wednesday's trading session, several stocks are set to make headlines with their quarterly earnings reports and strategic moves. Here's a detailed look at the key players and what to expect.

Tata Consumer Products: Tata Consumer Products reported a net profit of Rs 289.3 crore, with revenue soaring to Rs 4,352.1 crore. The company's EBITDA saw a significant rise of 22.5% to Rs 667.4 crore, expanding its EBITDA margin by 70 basis points year-on-year to 15.3%. Despite exceptional items and lower profits from associates and joint ventures impacting the bottom line, the core business showed strong organic growth of 10%. The India beverage segment grew by 6%, with coffee revenue skyrocketing by 28%. The India foods business was also impressed with a 30% revenue increase, driven by 14% organic growth. Growth businesses, including Capital Foods and Organic India, now constitute 29% of the company's portfolio.

Dixon Technologies: Dixon Technologies posted remarkable results with revenue doubling to Rs 6,580 crore. The earnings surge was primarily driven by the mobile segment, with EBITDA increasing by 88% to Rs 248 crore. Although the EBITDA margin slightly dipped to 3.8% from 4% last year, the net profit doubled year-on-year to Rs 140 crore. The mobile and EMS (Electronics Manufacturing Services) business, contributing 79% of the overall topline from last year's 55%, saw revenue jump by 189% to Rs 5,192 crore. The consumer electronics segment's contribution dropped to 13% from 27%, indicating a shift in focus. Dixon's management aims to scale up volumes to 40-45 million units by FY 2026-2027.

Indus Towers: Indus Towers reported a 42.9% increase in net profit to Rs 1,925.9 crore, with margins expanding to 61.6% from last year's 49.7%. Revenue grew by 4.3% to Rs 7,383 crore. The board approved a buyback worth Rs 2,640 crore, intending to repurchase up to 5.67 crore equity shares at Rs 465 per share, a 4% premium to Tuesday's closing price. The buyback will be conducted through the tender offer route, with August 9, 2024, set as the record date.

Castrol India: Castrol India posted a modest 3% increase in net profit to Rs 232.2 crore, with revenue up 4.8% year-on-year to Rs 1,397.5 crore. The company's EBITDA grew by 4.1% to Rs 322.4 crore, maintaining a stable EBITDA margin of 23.1% compared to last year's 23.2%.

Navin Fluorine: Navin Fluorine's net profit dropped by 16.8% to Rs 51.2 crore, despite a 6.6% rise in revenue to Rs 523.7 crore. The EBITDA also fell by 12.1% to Rs 100.4 crore, with the EBITDA margin decreasing to 19.2% from last year's 23.3%. However, refrigerant gas prices are recovering, and the AHF capex of Rs 450 crore is on track for commissioning by FY 2025 or early FY 2026. Specialty chemical sales were impacted by inventory rationalization, but a new supply agreement for an agrochemical product for the Japanese market promises incremental annual revenue of Rs 20-30 crore from 2025.

Zaggle Prepaid Ocean Services: Zaggle reported a 112.9% increase in revenue from last year to Rs 252.2 crore, although this was a 7.7% sequential decline. EBITDA surged by 186.3% to Rs 26.95 crore, despite a 15.5% drop from March. The number of corporate customers grew by 20.2% year-on-year to 3,119, and users on the platform increased by 19.4% to 28.9 lakh.

Torrent Power: Torrent Power's revenue grew by 23.3% to Rs 9,033.7 crore, with EBITDA soaring by 56.8% to Rs 1,857.9 crore. The EBITDA margin expanded to 20.6% from 16.2%, and net profit nearly doubled to Rs 996.3 crore. The company saw a significant increase in generation revenue, particularly from merchant power sales in gas-based power plants.

MOIL: MOIL posted a 30% increase in revenue to Rs 493 crore, with EBITDA up 72% to Rs 214 crore, and the EBITDA margin improving to 43.37% from 32.7%. Net profit rose by 76% to Rs 152.35 crore. The company undertook three successive price hikes between April and June, which will impact realizations in Q2 due to an 8% price cut in July.

Ajanta Pharma: Ajanta Pharma reported a 12.1% rise in revenue to Rs 1,145 crore, exceeding the estimate of Rs 1,119 crore. EBITDA came in at Rs 330.35 crore, higher than the expected Rs 296.2 crore, with an EBITDA margin of 28.9%. Net profit stood at Rs 245.7 crore, surpassing the estimate of Rs 209 crore. Growth was driven by robust performances in India, Asia, Africa, and US generics.

Global Market Cues
As Tuesday night rolled into Wednesday morning, S&P 500 futures remained almost flat, reflecting the cautious sentiment among investors. The anticipation of the Federal Reserve's monetary policy decision, set for Wednesday afternoon, kept the markets on edge. Here's a detailed look at the latest market movements and key factors influencing trading sessions across the globe.

S&P 500 futures advanced slightly by 0.1%, while Nasdaq 100 futures ticked up 0.5%. In contrast, futures tied to the Dow Jones Industrial Average dropped by 176 points, or 0.4%. The mixed movement in futures indicates varying investor expectations based on sector-specific earnings and upcoming monetary policy announcements.

In extended trading, Microsoft shares fell more than 2% due to its cloud business underperforming Wall Street expectations. Meanwhile, Advanced Micro Devices (AMD) surged over 7% following second-quarter results that surpassed forecasts. Nvidia, another tech giant closely linked to the AI sector, climbed more than 5% buoyed by AMD's positive report.

The regular trading session on Tuesday mirrored this mixed sentiment. The Nasdaq Composite, heavy with tech stocks, slid 1.3%. The broad S&P 500 dipped 0.5%, led downward by the information technology sector. Conversely, the Dow Jones Industrial Average managed to rise by 0.5%.

US Treasury yields remained relatively stable as investors awaited further economic data, particularly from the labour market, alongside the Federal Reserve's meeting outcomes. The 10-year Treasury yield edged down by approximately three basis points to 4.142%, while the 2-year Treasury yield settled at 4.35%, also dropping by over three basis points.

European markets closed higher on Tuesday, driven by continued earnings reports and upcoming central bank decisions in the US and UK The pan-European Stoxx 600 index closed up 0.53%, with most sectors posting gains. Construction and materials stocks led the charge with a 1.37% increase, although mining stocks lagged, shedding 1.22%.

Oil futures rebounded on Wednesday from seven-week lows, spurred by geopolitical tensions after Israel's retaliation against Hezbollah's attack. Despite the recovery, prices remained pressured by concerns over demand in China. Brent crude futures climbed 39 cents, or 0.5%, to $79.02 a barrel, with the October contract up 47 cents to $78.54. US West Texas Intermediate (WTI) crude futures rose 52 cents, or 0.7%, to $75.25 a barrel. Both Brent and WTI had dropped about 1.4% on Tuesday, marking their lowest closes in seven weeks.

Asia-Pacific markets showed mixed performance on Wednesday as investors awaited the Bank of Japan's (BOJ) rate decision and evaluated China's business activity data. Economists polled by Reuters expected the BOJ to raise rates to 0.1%, though some analysts predicted a larger hike. Japan's Nikkei 225 fell 0.94%, and the Topix was down 0.4%. Retail sales in Japan rose 3.7% year-on-year in June, surpassing the 3.2% expected by economists.

In South Korea, the Kospi edged up 0.17%, with Samsung Electronics gaining 0.49% after reporting a massive 1,458.2% year-on-year increase in second-quarter operating profit. Australia's S&P/ASX 200 led the region with a 1.19% rise, while Hong Kong's Hang Seng index increased by 0.42%, and the mainland Chinese CSI 300 was slightly down.

The GIFT Nifty traded with a slight discount of nearly 10 points from the Nifty Futures' Tuesday close, indicating a flat start for the Indian market on Wednesday. This tepid movement aligns with the global caution as investors brace for the Federal Reserve's policy decision.