Trade Setup for June 1: Nifty 50 may bounce post from support levels post GDP data, Auto sales in focus
KV Prasad Jun 13, 2022, 06:35 AM IST (Published)
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Summary
Indices like the Nifty 50 and Nifty Bank may see some volatility during Thursday’s weekly options expiry session.
The Nifty 50 index snapped a four-day winning streak on Wednesday, thereby also registering its first drop in the June F&O series. While it did break below the crucial support level of 18,500 in intraday trade, it managed to recover 50 points from the day’s low to end above those levels.
Despite the marginal correction on Wednesday, the Nifty 50 still ended the month of May with gains of close to 3 percent. The index gained for the third straight month, which is the first such instance since October 2021.
Indices like the Nifty 50 and Nifty Bank may see some volatility during Thursday’s weekly options expiry session. With the MSCI inflows and earnings season now out of the way, the market will look for fresh triggers to attempt another move towards its all-time high of 18,887.6.
What the market may take heart from is the fourth quarter and financial year 2023 GDP numbers. The latter, at 7.2 percent, was higher than the CNBC-TV18 poll of 7 percent. Experts also said that the numbers were well above estimates and a pleasant surprise. Automobile companies will also be reporting their monthly sales figures starting Thursday.
Gaurav Bissa of InCred Equities believes that the Nifty 50 index can resume its uptrend until it does not close below the mark of 18,450 on the downside. He cited the fact that the index tested its previous swing break of 18,460 but recovered and closed above the mark of 18,500.
The Nifty Bank index recovered 300 points from the session’s lows during the final 30 minutes of trade, courtesy the MSCI inflows, particularly in stocks like Kotak Mahindra Bank, which was likely to get inflows to the tune of $800 million. Shares of the private lender ended at a 52-week high. Even as the index closed with losses of over 300 points, it managed to hold the 44,000 levels after briefly breaking below those in intraday trading.
InCred’s Bissa terms the Nifty Bank’s move as important as it bounced strongly from an ichimoku support between 43,700-43,800. He said that the index can head towards 45,000 on the upside, if it manages to hold the above- mentioned support levels.
The Nifty Bank is currently in a 1,000 point range with support on the downside at 43,500, while resistance on the upside is seen at 44,500. The latter is a level where both put and call writing has been seen, according to LKP Securities’ Kunal Shah. “This suggests that there may be a considerable number of traders with bearish and bullish expectations around this price level,” Shah said.
An index that has outperformed in a weak market of Wednesday is the Nifty Realty index, which ended with gains of 0.8 percent. The index has now gained in four out of the last five trading sessions and has risen close to 10 percent so far this year. The index is also trading close to its 52-week high of 483.
“In my viewpoint, the companies are adequately priced at this point of time. Maybe if one is looking at these companies to stay in the portfolio, some corrective fall in the stock price would probably mean that buying opportunity is once again emerging,” Deven Choksey of KRChoksey told CNBC-TV18 with regards to real estate stocks. “Most of these companies are having a good amount of visibility as far as project execution is concerned. From company to company it differs,” he said.
What Do The F&O Cues Indicate?
Nifty 50’s June futures shed 6.3 percent or 6.28 lakh shares in Open Interest on Wednesday. The Nifty Bank futures also shed 0.5 percent in Open Interest. Wednesday’s drop took the Nifty 50’s put-call ratio below 1 to 0.99 from 1.32 on Tuesday. No stocks are currently in the F&O ban.
Nifty 50 on Call side for June 1 expiry:
Nifty 50’s call strikes between 18,500 and 18,650 saw addition in Open Interest for Thursday’s weekly options expiry. The 18,600 strike call saw the maximum Open Interest addition.
Strike |
OI Change (Shares) |
Premium |
18,600 |
60.96 Lakh Added |
25.50 |
18,500 |
56.42 Lakh Added |
77.35 |
18,550 |
48.36 Lakh Added |
47.35 |
18,650 |
24.8 Lakh Added |
11.8 |
Nifty 50 on Put side for June 1 expiry:
Put strikes between 18,500 and 18,650 continue to be added for the Nifty 50 index, indicating that the near-term range could be between 18,500 and 18,650. The 18,600 put saw Maximum Open Interest addition.
Strike |
OI Change (Shares) |
Premium |
18,600 |
39.25 Lakh Added |
25.50 |
18,500 |
23.96 Lakh Added |
77.35 |
18,650 |
17.71 Lakh Added |
47.35 |
Here are the stocks that have added fresh long positions on Wednesday, which means an increase in price as well as open interest:
Stock |
Price Change |
OI Change |
Indus Tower |
0.35% |
68.24% |
Torrent Pharma |
5.65% |
58.98% |
ABB India |
0.83% |
16.78% |
Bharti Airtel |
2.00% |
15.67% |
Syngene |
1.03% |
8.15% |
Here are the stocks that have added fresh short positions on Wednesday, which means a decrease in price, but an increase in open interest:
Stock |
Price Change |
OI Change |
Hindustan Aeronautics |
-1.56% |
34.80% |
Polycab |
-1.05% |
30.62% |
Maruti Suzuki |
-1.00% |
28.50% |
Vedanta |
-1.91% |
24.90% |
SBI Card |
-2.24% |
10.21% |
Here are some important stocks to watch out for in today’s session:
- Coal India: Government launches OFS to sell 1.5 percent equity with greenshoe option of another 1.5 percent. Floor price of Rs 225 is a 6.7 percent discount to previous closing.
- Laurus Labs: Increases stake in Cell and Gene therapy company ImmunoACT. To acquire another 7.24 percent stake for Rs 80 crore, taking the total stake to 33.86 percent.
- South Indian Bank: Finalises names of candidates for its next MD & CEO after incumbent Murali Ramakrishnan decided not to seek another term at the helm.
- MOIL: Increases prices of some manganese ore grades by 10 percent.
- Real Estate Stocks: Mumbai nets Rs 811 crore in property registrations in May led mainly by increased stamp duty and high-value transactions.
What Do Global Cues Indicate?
US equities ended lower on Wednesday as all eyes remained on the debt ceiling resolution. The deal advanced to the house floor for a final vote after clearing the House Committee in a 7-6 vote.
The Dow Jones fell 130 points, while the S&P 500 and the Nasdaq composite fell 0.6 percent each. Did you know, that all the gains made by the S&P 500 so far, and nearly 70 percent of the Nasdaq’s rally this year has been led by only six stocks? Surprised? Read more in this piece by Prashant Nair.
The Singapore traded SGX Nifty futures, which are an early indicator of how trade will pan out, were trading 69 points or 0.37 percent lower at 18,595, indicating another subdued to weak start to the weekly options expiry session.
Wednesday’s fund flow numbers will be influenced by two major block deals on HDFC Life and Sona BLW that took place. However, despite them, cash market volumes on the NSE were the second-highest ever at Rs 1.35 lakh crore. The highest was on November 27, 2020, at Rs 1.47 lakh crore.
Nifty 50’s resistance at 18,600 has become even stronger after Wednesday’s drop, said Ashwin Ramani of SAMCO Securities. Significant call writing was seen at the 18,500 strike on the Nifty 50, indicating a move of support levels downwards towards levels of 18,400, he said.
Rupak De of LKP Securities expects the current trend on the Nifty 50 to remain sideways to positive until it remains above the mark of 18,500. Resistance on the upside is seen at 18,650. However, a decisive fall below 18,500 can trigger further selling pressure on the index, he said.
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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow