Nifty Overview & Outlook

The benchmark index Nifty initially started off with a new record high but failed to maintain its momentum by the close, instead experiencing a sharp decline due to profit-taking. However, it recovered slightly in the latter half of the session to end with a modest decline of half a percent. The Auto giant M&M saw its worst performance after slashing prices on its high-end four-wheeler models, alongside weakness in Banking stocks, which contributed to overall pessimism in the Nifty. The Bank Nifty also closed lower, driven primarily by losses in PSU Banks, closing down by 0.7%.

In the broader market, the Midcap index showed relative strength, ending with a marginal decline of 0.2%, while the Smallcap index underperformed, dropping by 1% compared to the main index.

Sector-wise, the Pharma and FMCG sectors acted defensively, closing with slight gains. In contrast, the Nifty Auto sector reversed its gains from the previous day and suffered the most significant decline, losing 2%. Market breadth within the Nifty 500 index was heavily negative, with 184 stocks advancing and 314 declining.

From a technical perspective, the Nifty maintained its pattern of higher highs but formed a bearish engulfing pattern on the daily chart, signaling potential downside. The upcoming sessions will be critical; a confirmation of this pattern could lead to significant selling pressure. Key support levels are identified at 24,165 and 23,875, with resistance levels at 24,460 and 24,750 in case of a rebound, which it hinted in the second half on July 10,2024.

Derivatives Overview & Outlook

Yesterday, short buildup was seen in Finnifty and Midcap nifty futures with increase in open interest by 3.6% and 4.9% respectively. On the other hand, Nifty and Banknifty futures open interest shed by 1.5 and 8.5% on long unwinding.

Performance on the sectoral front was mix. Amongst them, short buildup was seen in Banking, Metal and Technology stocks, whereas some short covering was seen in Cement and Oil &Gas stocks. Long unwinding was seen in Chemical, Infrastructure and Power stocks.

On option front, call writing along with put writing was seen at multiple strikes and maximum positions are at 24500 CE followed by 24400 CE while the maximum put positions are at 24000 closely followed by 24200 PE.

Institutional Trading Activity

Yesterday, FIIs bought stocks worth Rs 584 Cr in the cash segment, sold stocks futures worth Rs 2076 Cr and also sold index futures worth Rs 3435 Cr.  DIIs were net buyer in the cash segment to the tune of Rs 1082 Cr.

Nifty Futures, Banknifty Futures and Finnifty Key Levels

Nifty – Resistances 24400-24500; Supports 24220-24100

Banknifty – Resistances 52400-52600; Supports 52000-51800

Finnifty – Resistances 23750-23820; Supports 23500-23400

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