Trade Setup for April 30: Nifty Bank on the cusp of a landmark; Can Nifty sustain the recovery?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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22,600 had been a barrier for the Nifty in the last two trading sessions. It not only closed above that on Monday, but also managed to cross last Thursday’s high of 22,625 in the process. For this feat, it has the private financials and SBI to thank. The top six Nifty gainers on Monday were financials.

ICICI Bank turned out to be the contributor-in-chief, with 82 out of the 220 points on the Nifty coming from the private lender. ICICI Bank was ably supported by HDFC Bank and SBI, all three put together contributed to 60% of the Nifty’s advance on Monday. ICICI Bank also became the second Indian bank to cross ₹8 lakh crore in market capitalisation. You can read more on that here.

With the week being a truncated one, Tuesday will be the weekly options expiry for the Nifty Bank contracts and the financial services index.

The surge in ICICI Bank coupled with other private banks has now taken the Nifty Bank on the cusp of the 50,000 mark. The index made a new record high of 49,474 on Monday and also ended close to the day’s high. Monday also turned out to be the best day for the banking index in two months.

Kunal Shah of LKP Securities said that the bullish trend of the Nifty Bank has strengthened after the bulls pushed the index above its previous swing high. He expects the index to move higher towards levels of 49,800 and 50,000 with the RSI in a bullish crossover and rising. Support on the downside is at 49,000.

The Nifty Bank has closed above its resistance of 48,500 and has nearly achieved the short-term target of 49,500, said Neeraj Sharma of Asit C Mehta Investment Intermediates. He expects the index to test 50,000 in the short-term, given the bullish momentum.

With Monday’s surge, the Nifty is now just 0.6% away from its earlier record high of 22,775 and has now gained in five out of the last six trading sessions.

Nagaraj Shetti of HDFC Securities said that the Nifty has closed above its resistane area and is now moving towards the new higher top formation of the pattern, which is above its previous record high of 22,775. He sees next upside levels for the index at 22,800 – 22,900 with immediate support at 22,500 levels.

For the trend following traders, 22,425 will be a key support level, above which the Nifty can rally towards levels of 22,700 – 22,775, said Shrikant Chouhan of Kotak Securities. He added that the market texture is bullish but buying on intraday dips and selling on rallies would be the ideal strategy for the day traders.

Angel One’s Rajesh Bhosale wrote that the support for the Nifty has shifted higher towards levels of 22,400, while previous record levels of 22,775 and 22,800 will serve as an immediate resistance before the index heads to the 23,000 mark.

For Tuesday’s trading session, the market will react to earnings from stocks like Tata Chemicals Gillette India, KFin Technologies, Poonawalla Fincorp, UCO Bank and others.

Indian Oil Corporation will be reporting results on Tuesday, along with stocks like Adani Energy Solutions, Adani Total Gas, Castrol India, Cholamandalam Investment and Finance, Exide Industries, Newgen Software, Symphony, IndiaMART among others.

Both foreign and domestic institutions were net buyers in the cash market on Monday. Foreign institutions snapped a multi-day selling streak on Monday.

What Are The F&O Cues Indicating?

Nifty 50’s May futures added 3.2% or 3.36 lakh shares in Open Interest on Monday. They are now trading at a premium of 107.15 points from 136.05 points earlier. On the other hand, Nifty Bank’s May futures added 24.5% or 4.28 lakh shares in Open Interest. Nifty 50’s Put-Call Ratio is now at 1.23 from 0.96 earlier.

Biocon is also in the F&O ban along with Vodafone Idea.

Nifty 50 on the Call side for May 2 expiry:

On the Call side, the Nifty 50 strikes of 22,800 and 22,850 saw Open Interest addition, while the 22,500 and 22,600 strikes saw Open Interest shedding for this Thursday’s weekly expiry.

Nifty 50 on the Put side for May 2 expiry:

For the Put side, the Nifty 50 strikes between 22,500 and 22,600 saw Open Interest addition for this Thursday’s expiry.

These are the stocks that added fresh long positions on Monday, meaning an increase in both price and Open Interest:

These stocks saw addition of fresh short positions on Monday, meaning an increase in Open Interest, but decline in price:

Unwinding of long positions was seen in these stocks on Monday, meaning a decline in both price and Open Interest:

These are the stocks to watch out for ahead of Tuesday’s trading session:

• Nestle India: MD Suresh Narayanan tells CNBC-TV18 exclusively that the company has reduced sugar in products and it will be reduced further. In some products, sugar is needed for texturisation.
• Tata Chemicals: Net loss of ₹850 crore compared to a net profit of ₹709 crore last year. Revenue down 21.1% to ₹3,475 crore, EBITDA down 54.1% to ₹443 crore, while EBITDA margin down to 12.8% from 21.9% last year. Company reported an impairment loss of ₹963 crore due to the UK operations.
• Can Fin Homes: Net Interest Income up 25.5% year-on-year to ₹327.8 crore. Net profit up 26.1% year-on-year to ₹209.03 crore. Gross NPA at 0.82% from 0.91%. Net NPA at 0.42% from 0.49%.
• Birlasoft: Reports US Dollar revenue growth of 1.6%, lower than the 2.2% estimates. However, margin at 16.3% from 16% sequentially despite two months of incremental wage hike impact. Deal TCV at $240 million, down 16% year-on-year but up 10% from December.
• Shoppers Stop: March quarter revenue crosses ₹1,000 crore. Beauty business outperformed, growing by 7% and contributed 18% to the overall mix. Premiumisation continues to increase with Average Transaction Value (ATV) at 8%. Loyal Customers contributed 78% of the total sales. EBITDA grew 9% but impacted due to one-time investments in the beauty business and inventory write-off.
• NMDC: Increases lump ore prices by ₹400 per tonne and fines prices by ₹200 per tonne. Lump ore prices now at ₹6,200 per tonne and fines prices now at ₹5,260 per tonne.
• Coromandel International: To set up a Phosphoric Acid and Sulphuric Acid plant at Kakinada in Andhra Pradesh worth ₹1,000 crore.
• Gillette India: Net profit down 3.5% to ₹99.1 crore, while revenue up 9.9% to ₹680.7 crore. EBITDA up 19.9% to ₹160.3 crore, while EBITDA margin up 200 basis points to 23.1%.
• Poonawalla Fincorp: Net profit up 83.6% to ₹331.7 crore, Net Interest Income up 57% to ₹640.5 crore. NIM up 11.06% from 11.3% from last year. Gross NPA at 1.16% from 1.33%, while net NPA at 0.59% from 0.7%.
• KEC International: Gets new orders worth ₹1,036 crore across various businesses.
• UCO Bank: Net profit down 9.5% year-on-year to ₹525.8 crore, while Net Interest Income up 10.9% from last year to ₹2,187.4 crore. Gross NPA at 3.46% from 3.85% in December, while Net NPA at 0.89% from 0.98% quarter-on-quarter.
• Rossari Biotech: Net profit up 17.2% to ₹34 crore. Revenue up 16.3% from last year to ₹472.7 crore. EBITDA up 16.5% to ₹63.5 crore. EBITDA margin at 13.4%, which is flat from last year.
• Rail Vikas Nigam: Gets LoA for a project worth ₹438.95 crore from Southern Railway.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow