Share Market Price: October 2022

Monday 31 October 2022

Nifty forms bullish candle; 18,100 to be next crucial resistance

The Nifty50 as expected had a strong gap-up opening on October 31 and finally closed above the psychological 18,000 mark for the first time since September 13, driven by a rally in auto, banking & financial services, technology, and pharma stocks. The robust beginning of the week was especially after consolidation last week, ahead of a special Reserve Bank of India (RBI) meeting and the Federal Reserve's interest rate decision due later this week.

The index has formed a bullish candle on the daily charts as the closing was higher than the opening levels. Given the optimism, the 50-share NSE benchmark can march towards 18,100 if it strongly holds the 17,900-18,000 area in coming sessions, followed by which the next target would be 18,350, the high of a current calendar year, with crucial support at 17,500-17,800 zone, experts said.

The broader markets had a mixed trend as the breadth was not completely in favor of bulls. About 1,084 shares advanced against 916 declining shares on the NSE. The Nifty Midcap 100 index was up 1.1 percent and Smallcap 100 index ended flat with a positive bias.

The Nifty50 opened gap-up by more than 100 points at 17,910 and hit an intraday high of 18,023. The index closed with 225-point gains at 18,012."The Nifty has formed a bullish candle and higher bottom formation, which is indicating the continuation of an uptrend in the near future," Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities said.

Below 17,900, traders may prefer to exit long positions, the market expert advised. On further decline it could retest the 17,800 mark, he said. India VIX was down by 0.75 percent to 15.80 levels, which also made the bulls comfortable. In the immediate term, the Nifty50 may trade in the range of 17,700 to 18,200 levels as per the Options data.

On the Option front, the maximum Call open interest was seen at 18,500 strikes followed by 18,000 strikes while the maximum Put open interest was seen at 17,000 strikes, followed by 17,500 strikes.

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Friday 28 October 2022

Wall Street surges to sharply higher close ahead of Fed week

A robust, broad-based rally sent Wall Street to a sharply higher close on Friday as encouraging economic data and a sunnier earnings outlook fueled investor risk appetite ahead of next week's much-anticipated two-day policy meeting of the Federal Reserve.

All major U.S. indexes ended the session up about 2.5% or more, with the S&P and the Nasdaq notching their second straight weekly gains. The blue-chip Dow posted its fourth consecutive Friday-to-Friday advance and its biggest weekly percentage gain since May.

"This has been one of the best months (so far) in the history of the Dow, suggesting the bear market likely ended," said Ryan Detrick, chief market strategist at Carson Group in Omaha. "Big monthly moves historically happen at the end of bear markets."

"This is the second Friday in a row we've seen aggressive buying suggesting investors are growing more comfortable holding over the weekend," Detrick added.A 7.6% rebound in Apple Inc helped soften the blow of the 6.8% plunge for Amazon.com shares, in the wake of the two market leaders' results.

Solid earnings beats from Chevron, Exxon Mobil and other companies outside the tech and tech-adjacent megacap group have brightened aggregate earnings estimates for the quarter.

Analysts now see third-quarter S&P 500 earnings growth of 4.1%, up from 2.5% on Thursday, according to Refinitiv data.

"We've seen some high-profile misses from significant large-cap names," Detrick said. "But under the surface many of the smaller and midsize companies have been quite impressive with their earnings results."

Financial markets have now priced in an 84.5% likelihood of a fifth consecutive 75 basis point interest rate hike at the conclusion of the Fed's Nov. 1-2 policy meeting, and a 51.4% chance the central bank will decelerate to 50 basis points in December, according to CME's FedWatch tool.

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Tuesday 25 October 2022

Nifty forms Bearish Belt Hold pattern, consolidation likely to continue before further uptrend

The Nifty50 lost momentum after the initial hour of the rally and remained under pressure throughout the session, forming a bearish candle which resembles a Bearish Belt Hold kind of pattern on the daily charts on October 25. This pattern is generally getting formed in an upward trend.

The index erased half of its Muhurat trading gains. This could just be a profit-taking after the recent rally and hence, as long as the index trades above its previous consolidation zone of 17,400-17,650, the trend is expected to be positive with resistance in the range of 17,900-18,000 levels, and support at 17,500-17,400 zone, experts said.

A 'Bearish Belt Hold' pattern is formed when the opening price becomes the highest point of the trading day (intraday high) and the index declines throughout the day making up the large body. The candle will either have a small or no upper shadow and a small lower shadow.

The broader markets had a mixed trend amid weak breadth. The Nifty Midcap 100 index was up half a percent and Smallcap 100 index declined 0.1 percent. About five shares declined for every three rising shares on the NSE.

The Nifty50 opened strong at 17,808 and hit a high of 17,811, but after an initial hour of the rally, erased all those gains and corrected up to 17,637, an intraday low. The 50-share NSE benchmark closed with 75 points loss at 17,656.

"During the day, the Nifty remained above the previous consolidation high, suggesting a rise in optimism. Over the short term, the trend is expected to remain strong," Rupak De, Senior Technical Analyst at LKP Securities said. On the higher end, resistance is visible at 17,950. On the lower end, support is placed at 17,550-17,400, De added.

India VIX, which measures the expected volatility in the market, was down by 3.11 percent from 17.42 to 16.88 levels. Volatility cooled off from its highs but it needs to now further come down to 15-16 levels for market stability and a smoother ride, experts said.

On the Option front, we have seen maximum Call open interest at 18,000 strike followed by 17,800 strike while maximum Put open interest was seen at 17,500 strike then 17,000 strike.

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Friday 21 October 2022

Uptrend likely to continue if Nifty holds 17,500

The Nifty50 on October 21 started off on a positive note but weakness in European counterparts weighed on the sentiment in the later part of the session. The index eventually settled flat with a positive bias amid caution ahead of the long weekend, thereby extending the uptrend for the sixth consecutive session.

The index formed a small-bodied bearish candle on the daily charts as the closing was lower than the opening levels. The Nifty50 seems to have taken good support at 17,500-17,400 levels now, hence if it holds the 17,500 mark in coming sessions then the index can easily march towards 17,700-17,900 levels, experts said.

On a weekly basis, the Nifty50 has seen the formation of a decent bullish candlestick pattern, indicating that 17,900 is going to be the next stop for the index. It recouped all its previous week's losses and closed with 2.27 percent gains during the week.

On the broader markets front, however, there was underperformance compared to benchmarks. The Nifty Midcap 100 index was down 0.7 percent and Smallcap 100 index fell 0.14 percent amid weak breadth. About two shares declined for every share rising on the NSE.

The Nifty50 opened higher at 17,623 and hit an intraday high of 17,670, but some profit booking in the later part of the session pulled down the index up to 17,521 intraday. The index finally closed at 17,576, up 12.3 points.

"The Nifty successfully surpassed the 20 and 50 days SMA (simple moving average) resistance mark which is largely positive. It has also formed a long bullish candle on weekly charts that suggest further uptrend from the current levels," Amol Athawale, Deputy Vice President - Technical Research at Kotak Securities said.

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Wednesday 19 October 2022

Indian stock market may continue to outperform in Samvat 2079

India's equity market is expected to continue outperforming global peers in the Hindu calendar year of Samvat 2079, aided by strong corporate earnings, analysts said.

Profit is likely to grow over 20 percent in 2023, led by strong credit offtake and a revival in private capital expenditure.

However, money managers expect volatility in returns from the equity market to remain high, given concerns over an impending global recession and geopolitical flashpoints in Europe and Asia.

The benchmark stock indices were resilient in Samvat 2078, with the Sensex and the Nifty losing about 1.89 percent and 2.59 percent, respectively, since last Diwali.

Although these were the first negative returns since 2016, the MSCI Emerging Markets index dropped 31 percent while the MSCI ACWI index lost 25 percent during the same period.

For global equities, Samvat 2078 turned out to be a challenging year, given headwinds including rate hikes, the energy crisis, the Russia-Ukraine conflict, continued supply disruptions, outflows from foreign investors, and heightened inflation.

End of cycle

Morgan Stanley said recently stocks in emerging markets and Asia excluding Japan are close to completing their bear market cycles. Nomura Research said Asian equities, including chipmakers, may bottom in the next few weeks after reviewing indicators on the last 12 US recessions and five chip cycles.

"... over the medium-term (>12 months), we see risk-reward quite attractive on Asian stocks. Assuming China does reopen sometime in early 2023 and stocks attempt to anticipate the end of the US recession (NMR: 4Q23), it is likely that a sustained recovery in Asian stocks may occur sometime in the first half of 2023," Nomura Research said in a report.

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Tuesday 18 October 2022

Nifty forms bullish candle, 17,500-17,600 crucial area for further upside

The Nifty50 index is now closer to crucial area of 17,500-17,600 levels. If it manages to surpass this area, then it can gradually march towards 17,800-18,000 levels in coming sessions, with near term support at 17,300 followed by crucial at 17,000, said experts

The Nifty50 had more than 100 points gap up opening and decisively crossed more than couple of earlier swing highs to close with a percent gains, forming small bodied bullish candle on the daily charts on October 18. The 50-share NSE benchmark index extended uptrend for third session in a row, tracking positive mood in global counterparts, but failed to sustain 17,500 mark at close.

The index is now closer to a crucial area of 17,500-17,600 levels. If it manages to surpass this area, then it can gradually march towards 17,800-18,000 levels in coming sessions, with near-term support at 17,300 followed by crucial at 17,000, experts said.

The rally was seen across sectors with Bank, Auto, FMCG, IT, Metal and Oil&Gas indices gaining 1 percent each, while the broader markets were also strong with the Nifty Midcap 100 index rising 1.15 percent and Smallcap 100 index climbing 0.8 percent.

The Nifty50 opened higher at 17,439 and jumped up to 17,528, an intraday high. The index rose 175 points to 17,487, the highest closing level since September 22, taking total three-day gains to around 3 percent.
"In terms of the Fibonacci retracement, 61.8 percent retracement of the entire September decline i.e. 17,580 is expected to keep the current bounce in check," said Gaurav Ratnaparkhi, Head of Technical Research at Sharekhan by BNP Paribas.

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Thursday 13 October 2022

Nifty forms bearish candle, sharp weakness possible below 200 DMA

The Nifty50 remained under selling pressure throughout the session on October 13 and fell more than 100 points, but defended not only recent low of 16,950 but also 200 days moving average (DMA - 16,987), tracking weak Asian cues. If these levels get broken then sharp selling pressure can't be ruled out in coming sessions, till then consolidation and volatility is expected to continue, experts said.

The index has formed bearish candlestick pattern on the daily charts as the closing was lower than opening levels. Banking & financial services, select IT and FMCG stocks weighed down the market.

The broader markets also traded in line with benchmarks as the Nifty Midcap 100 index was down 0.7 percent and Smallcap 100 index fell 0.4 percent on weak breadth. About two shares declined for every share rising on the NSE. The Nifty50 opened lower at 17,087 and hit a day's low of 16,957 amid volatile and rangebound session. The index settled at 17,014, down 109 points
The Nifty50 remained under selling pressure throughout the session on October 13 and fell more than 100 points, but defended not only recent low of 16,950 but also 200 days moving average (DMA - 16,987), tracking weak Asian cues. If these levels get broken then sharp selling pressure can't be ruled out in coming sessions, till then consolidation and volatility is expected to continue, experts said.

The index has formed bearish candlestick pattern on the daily charts as the closing was lower than opening levels. Banking & financial services, select IT and FMCG stocks weighed down the market.

The broader markets also traded in line with benchmarks as the Nifty Midcap 100 index was down 0.7 percent and Smallcap 100 index fell 0.4 percent on weak breadth. About two shares declined for every share rising on the NSE.

The Nifty50 opened lower at 17,087 and hit a day's low of 16,957 amid volatile and rangebound session. The index settled at 17,014, down 109 points.

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Wednesday 5 October 2022

Sensex, Nifty have fallen over 6% since last Dussehra, first time in 12 years

An unfriendly interest rate scenario amid higher inflation is expected to crimp growth globally, however, the Indian stock market is unlikely to face any great challenges and will continue to outperform, analysts expect.

India's benchmarks Sensex and Nifty are down over 6 percent each from Dussehra last year to date. This is the first time since 2011 that both equity indices have posted such losses. This year, Dusshera will be celebrated on October 5.

In the same period, foreign investors sold around $27.78 billion in local equities, while domestic institutional investors bought shares worth Rs 3.17 trillion.

The fall in the markets was due to weak global cues, the depreciating rupee and sharp selling by foreign institutional investors (FIIs), triggered by the US Federal Reserve's liquidity squeezing policy.

Globally, too, equity markets have sustained deep losses this year on a hawkish Fed trying to tame rising prices. Moreover, the Russia-Ukraine conflict has created supply chain issues that have contributed to elevated inflation.

The Reserve Bank of India (RBI) also raised its policy rate by 50 basis points for the third time to rein in inflation. With this, many brokerages and rating agencies have reduced India's growth target. In the recent policy, RBI cut India's GDP growth projection to 7 percent from 7.2 percent earlier.

Despite these headwinds, Indian markets, analysts believe, will continue to outperform global peers as the country has shown consistent improvement in macroeconomic data.

Healthy goods and services tax (GST) collections, better-than-expected auto sales numbers, a surge in credit growth and an above-normal monsoon all help make India more attractive than other emerging economies. This, along with continued buying by foreign investors and falling crude and commodity prices, has improved sentiment.

According to Mitul Shah, analyst at Reliance Securities, the Nifty target for FY23 is at 19,000 points at 20 times estimated FY24 earnings.

"We expect a strong economic rebound, normalised commodity prices, inflation within the targeted range and better visibility in the second half of FY23, which would transform Nifty valuations to close to the historical average. We expect FII inflows to continue and equities would continue with the outperformance with double-digit returns. We prefer sectors like automobiles, capital goods and consumer, which are likely to be in focus going ahead," Shah said.

The mix

Between the last Dussehra and now, the BSE Power, BSE Capital Goods, BSE Auto and BSE FMCG indices are the only gainers, having risen between 5 and 15 percent, while other sectoral indices are in the red.

The BSE Realty and IT indices were the top losers, down 21 percent each, followed by BSE Metal and Healthcare, which lost 15 percent and 11 percent respectively. Other indices like BSE Energy, Oil & Gas, Consumer Discretionary, Consumer Durables and Bankex declined 1-8 percent. The BSE MidCap and SmallCap fell 7 percent and 4.3 percent, respectively, in this period.

Going forward, the markets should take a cue from the developments on these fronts and any new emerging triggers, analysts say.

Monday 3 October 2022

Nifty forms bearish candle, a slip below 16,800 can trigger more weakness

The index formed a bearish candlestick on the daily charts, indicating a lack of strength. The index though managed to defend crucial support of 16,750-16,800. If it fails to hold the support, then the index can slide to 16,600-16,300 in the coming sessions, experts said.

"The index has fallen below the 200-day moving average (DMA), which is again a bearish setup. The relative strength index (RSI) is in bearish crossover and falling towards the oversold zone," Rupak De, Senior Technical Analyst at LKP Securities said.

On the lower end, the index has support at 16,800. A decisive fall below 16,800 can take the Nifty towards 16,600-16,300. On the higher end, resistance is visible at 17,000-17,200, the market expert said.

The broader market mirrored the benchmark, with the Nifty midcap 100 and smallcap 100 indices declining 1.25 percent and 0.66 percent. About two shares declined for every share that gained on the NSE.

India VIX, which indicates the expected volatility in the market over the next 30 days, moved up after declining in a previous couple of sessions. It rose 6.99 percent to 21.37.

On the Options front, the maximum Call open interest was seen at 17,000 strike followed by 17,500 strike, while the maximum Put open interest was at 16,000 strike then 17,600 strike.

The marginal Call writing was seen at 17,000 strike followed by 17,100 strike, while marginal Put writing was seen at 17,000 strike then 16,900 strike. The options data suggests that the Nifty50 may trade in 16,700-17,300 range in the immediate term.

The Bank Nifty opened negative at 38,445 and the weakness continued throughout the session. It formed a Bearish Harami candle or an Inside Bar on the daily scale and closed 602 points lower at 38,030.

"Now till it holds below 38,000 levels, weakness could be seen towards 37,750 and 37,500 levels, whereas hurdles can be seen at 38,250 and 38,500," Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services said.

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