Market Recovers After Initial Pressure
The Indian stock market demonstrated resilience on Wednesday, shaking off a weak opening to trade in positive territory. Both benchmark indices, the Nifty 50 and the BSE Sensex, started the day lower due to persistent selling activity from foreign portfolio investors (FPIs).
The Nifty 50 index opened at 25,842.95, marking a decline of 41.85 points or 0.16%. Similarly, the BSE Sensex began trading at 84,503.44, down 83.57 points or 0.10% from its previous close. However, the markets quickly found their footing, drawing inspiration from positive global cues and reversing the early losses to register modest gains.
Analyst Outlook and Key Levels to Watch
According to Jay Thakkar, Vice President & Head of Derivatives and Quant Research at ICICI Securities, the Nifty 50 closed negatively for the third consecutive day, but a significant development was the sharp drop in the India VIX. The fear gauge fell by over 8%, settling well below 13 at 12.16 levels. Thakkar notes that implied volatilities (IVs) have also retreated to around 10, suggesting that market volatility may not be a major concern in the immediate future.
He expects the market to enter a phase of consolidation, finding resistance near its all-time high levels. The 26,000 to 26,200 range is identified as a key resistance zone, while 25,700-25,500 is expected to act as a support for the upcoming weekly expiry. This sets a broader trading range of 26,200 to 25,500 for the Nifty.
Thakkar highlighted that Bank Nifty continues to outperform, though private sector banks are facing supply pressure at higher levels. He emphasized that if private banks lead the charge, the Bank Nifty could approach the 60,000 mark, which would be a positive signal for the Nifty 50. Furthermore, the Nifty IT index has had a positive month with some short covering, and more of this activity could provide additional support. The strong performance of Reliance Industries, closing well above the ₹1,500 mark, also indicates a positive short-to-medium term trend, offering further stability to the index.
Stocks to Watch: Expert Recommendations
Jay Thakkar of ICICI Securities has provided specific trading strategies for three stocks:
Buy Glenmark Pharmaceuticals Futures: He recommends buying in the range of ₹1,890-1,860 with a stop loss of ₹1,815 and targets of ₹1,980-2,040. The stock has shown signs of base formation after a period of long unwinding, and a significant open interest build-up suggests a potential sharp upward move is possible.
Buy Tech Mahindra Futures: The recommendation is to buy between ₹1,495-1,505, with a stop loss at ₹1,445 and targets of ₹1,575 and ₹1,610. Unlike many IT stocks, Tech Mahindra is witnessing long built-up and has broken out from a falling trend line, indicating potential for further gains.
Sell Bharat Dynamics Futures: Thakkar advises selling in the ₹1,470-1,480 range, with a stop loss of ₹1,510 and targets of ₹1,420 to ₹1,400. The stock's short-term uptrend, driven by short covering, has faltered, and it has resumed its downtrend with an increase in open interest, pointing to a negative near-term outlook.
Disclaimer: The views and recommendations are those of the individual analyst. Investors are strongly advised to consult certified experts before making any investment decisions.
