Morning Outlook 26th September, 2022

NIFTY:

The NIFTY opened at 17593.85 with a gap down of just 36 points. Prices moved further on the downside after recording its intraday high at 17642.15 within the first 5 minutes of trading. The index broke down below 17500 and then started a process of consolidation. Prices have moved sideways, eventually breaking on the downside, and prices have seen another leg of decline. A minor correction came after the index recorded its intraday low at 17291.65 in the late hour of trading and prices have finally dosed at 17327.35 which a loss of 302.45 points or 1.72% down. All the sectoral indices have contributed to the downside and dosed lower. PHARMA outperformed today and closed without much of a change. BANK and FINANCIAL led the bears today and dosed with more than a 2% loss. The short-term trend is down now. We have been tracking a trading range inside 17500 – 18000. This range is broken decisively on the downside giving us a pattern target of around 17000. The volatility again rose today exceptionally. The INDIA VIX, a benchmark index for volatility, is now moving above 20 suggesting high volatility, which is unfavourable for the bulls. After a wide range day today, we may see a few days of chop Pf and narrow trading. We should avoid trading the index for one or two days more. Support is now visible around 17200 and resistance is visible around 17500.

BANK NIFTY:

The BANK NIFTY opened at 40429.5 with a big gap down of 208 points. The index moved further on the downside after recording its intraday high at 40528.40 and broke below 40000. The index then consolidated and again broke on the downside. Prices have seen another leg of decline, recording its intraday low at 39412.70 and finally closing at 39555.35 with a loss of 1082 points. PVT and PSU BANKS both indices have performed almost the same today, saw a sharp decline, and closed lower by 2.62 % & 3.97 % respectively. Within the index, in terms of points, HDFC BANK contributed the highest on the downside followed by ICICIBANK. BANK NIFTY continued moving lower for the third consecutive trading day and closed with a big loss of almost 3%. It was a trend day today on the downside where prices have recorded its intraday high near the opening tick and intraday low near the closing tick. We have been tracking a trading range in the BANK Index inside 40000 – 42000. Prices have broken down decisively on the downside and giving us a pattern target of around 38000. The short-term trend is down. After such a wide range day, prices tend to consolidate or move narrow. As of now, we should avoid trading the index and wait for an adequate setup to emerge.

TECHNICAL PICKS

DERIVATIVE PICKS

TOP DELIVERY PERCENTAGE

UPCOMING ECONOMIC DATA

NEWS UPDATES

• Indian benchmark indices made a gap down opening and closed in red for the third consecutive session. Nifty50 closed at 17327.30 (-1.72%) and Sensex closed at 58098.92 (-1.73%). Among sectors, Selling was visible in Banks, Financials, Capital goods, and Reality whereas Nifty pharma closed in green.

• The Indian rupee weakened past 81 against the U.S. dollar for the first time. The Indian rupee has depreciated 40 paise over its previous close to a fresh record low of 81.26 against the greenback early on Friday.

• Nestle SA plans to invest Rs 5,000 crore in India by 2025, The capital expenditure is earmarked for setting up new plants, expansion of the product portfolio, and acquisitions, Schneider said. Nestle India Ltd., currently operates nine plants across the country. The investment, which would be subject to clearances and approvals, will also aid job creation.

• Mahindra & Mahindra Financial Services Ltd. hit the lower circuit after the company said it would repossess fewer vehicles than its usual flow, as the RBI in its order had said the company must suspend all recovery and repossession actions through third-party arrangements. The order had come after a tractor repossession action in Jharkhand had allegedly led to the death of a pregnant woman.

Source: Economic Times,  Indian Express, Business Today, Livemint, Business Standard, Bloomberg Quint

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