Nifty Overview & Outlook

The Nifty benchmark index started positively in anticipation of the Union Budget announcement. However, it plummeted during Finance Minister Nirmala Sitharaman’s speech when she announced hikes in Short-Term Capital Gains (STCG) and Long-Term Capital Gains (LTCG) taxes, alongside Securities Transaction Tax (STT) on derivatives. However, Nifty recovered sharply and ended the session nearly unchanged after slightly positive adjustments to income tax slabs, a revised fiscal deficit target, and increased focus on rural economic growth. Ultimately, Nifty closed 0.1% lower, while the Bank Nifty underperformed, declining nearly 1%.

The broader markets also lagged behind the benchmark, with the Midcap and Smallcap indices ending 0.7% and 1.1% lower, respectively. The Nifty FMCG index surged the most by 2.7% due to focus on rural development in Budget. Nifty Media followed with a gain of 1.2%, whereas Nifty Realty was the biggest loser, falling 2.3%. Most other sectoral indices mirrored this decline resulting in an overall negative market breadth, with 201 stocks advancing and 297 declining.

From a technical standpoint, Nifty experienced significant volatility during the eventful day. It corrected near a critical support level of 24140 before rebounding to close nearly flat amid short covering. Looking ahead, if Nifty continues its rebound, immediate resistances are seen at 24560 and 24690. However, considering a broader perspective, Nifty shows signs of forming a Head & Shoulders pattern, suggesting potential retracement and formation of a right shoulder around a neckline of 24140. We hold support levels at 24330 and 24140, below which we may see a substantial decline.

Derivatives Overview & Outlook

Yesterday, Nifty and Finifty futures shed 3.7% and 1.8% of open interest respectively as long unwinding whereas no significant change was seen in Banknifty futures on open interest front.

Nifty and Banknifty futures have rolled 30% & 29% of open interest each into next contracts so far.

On options front, put writing along with call writing was seen at multiple strikes and maximum positions are at 24000 PE closely followed by 24500 PE and 25000 CE closely followed by 24500 CE.

Institutional Trading Activity

Yesterday, FIIs sold stocks worth Rs 2975 Cr in the cash segment, sold stocks futures worth Rs 6174 Cr and also sold index futures worth Rs 3660 Cr. DIIs were net buyer in the cash segment to the tune of Rs 1419 Cr.

Nifty Futures, Banknifty Futures and Finnifty Key Levels

Nifty – Resistances 24600-24720; Supports 24200-24080

Banknifty – Resistances 52000-52250; Supports 51500-51200

Finnifty – Resistances 23500-23600; Supports 23200-21500

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