Trade Call: 2 Stock Picks By Sumeet Bagadia On Wednesday, 6th March

The Indian stock market showed conflicting sentiments during a tumultuous trading day on Tuesday, with the key indices finding it difficult to sustain pace.

A four-day winning run came to an end on the market at closing, with the Sensex down 195 points to 73,677 and the Nifty down 49 points to 22,356. Nifty fell rapidly in the second half before closing at 22,356, down 49 points, after opening the day with a loss and continuing to fall further in the first half. The volatility index, or India VIX, is stable at 14.38 points, indicating that a spike in volatility could lead to market uncertainty.

Nifty Outlook

Rupak De, Senior Technical Analyst, LKP Securities said, “Bulls and bears experienced another day of minor clashes without arriving at a definitive outcome. The sentiment remains positive, with the index staying above the short-term moving average.

The momentum indicator RSI is showing a bullish crossover. For a potential rally towards 22600 and beyond, Nifty needs to decisively breach the 21400 level. On the downside, support is positioned at 22200.”

Bank Nifty Outlook

Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities said, “The Bank Nifty bulls maintained their control, holding firm above the crucial support level of 47400. The immediate resistance for the index is positioned at 48000, and a successful breach of this level is anticipated to propel the index towards its all-time high. The overall outlook remains bullish, and any declines toward the mentioned support level are considered buying”

Market Outlook

Mr. Ashwin Ramani, Derivatives & Technical Analyst, SAMCO Securities said, “The Long-Short ratio has risen from 34.84% on 1st March to 37.99% on 4th March. The Foreign Portfolio Investors (FPIs) have been steadily building long positions and liquidating short positions in Index futures since last three trading sessions. Call writers (Bears) entering along with put writers (Bulls) exiting was observed at the 22,400 Strike in Nifty.

This led to the Index taking resistance around the 22,400 levels twice on Intraday basis. The bears lead the bulls by a fair margin at the 22,400 Strike and the option activity at this strike will provide cues about Nifty’s Intraday direction Wednesday. Bank Nifty traded in the 47,200-47,400 range in the first half before breaking out sharply and closing 125 points higher at 47,581.

All Strikes from 46,200 until 47,500 saw call writers (Bears) exiting and aggressive put writing (Bulls’ entry). This led to the Index breaking out the sideways range in the second half of the trading sessions. The put writers (Bulls) have sizeable positions at the 47,500 Strike and the option activity at this Strike will provide cues about Bank Nifty’s Intraday direction ahead of the weekly expiry Wednesday.”

Mr. Om Mehra, Technical Analyst, SAMCO Securities said, Technically, Nifty exhibited resilience by holding onto the crucial support of 22,200. The 20-day Simple Moving Average (SMA) is providing additional support as well.

The Relative Strength Index (RSI) is comfortably settled at 61 level. However, caution is advised, as certain sectors appear to be in overbought territory, potentially setting the stage for profit-booking.

This could notably impact mid and small-cap equities. While Bank Nifty concluded the session at 47,581 advancing by 0.26%. The 20 EMA is holding strong support at the 46,900 level while resistance is placed at 48,100. The majority of private-sector banking stocks are showing relative strength.”