The selling pressure continued for the seventh consecutive session on February 27. But there was a bit of recovery towards the end, helping the Nifty50 form a bearish candle with a long lower shadow which resembles a Hammer pattern on the daily charts.
The formation of Hammer, the bullish reversal pattern, in the downtrend and especially after looking oversold, may raise the chances of a rebound in the following sessions, which we need to watch closely going ahead.
The BSE Sensex fell 175 points to 59,288, while the Nifty50 declined 73 points to close at 17,393 after recovery from the day’s low of 17,300 and budget day’s low of 17,353, which coincides with the 200-day SMA (simple moving average).
“Normally, such Hammer pattern formation after a reasonable decline in the underlying signal caution for reversal on the upside post confirmation. Hence a sustainable upside bounce on Tuesday is likely to confirm a short-term bottom reversal pattern,” Nagaraj Shetti, Technical Research Analyst at HDFC Securities said.
Shetti says that the short-term trend of the Nifty continues to be negative, but any attempt of an upside bounce from here could find strong resistance around 17,600 levels. The immediate support is placed at 17,300-17,250 levels, he said.
Auto, FMCG, technology, metal and pharma stocks pulled the market down, while banking and financial services led support. The broader markets also traded lower with the Nifty Midcap 100 and Smallcap 100 indices falling 0.7 percent and 1.1 percent respectively.
We have collated 15 data points to help you spot profitable trades:
Note: The open interest (OI) and volume data of stocks in this article are the aggregates of three-month data and not just the current month.
Key support and resistance levels on the Nifty
As per the pivot charts, the Nifty has support at 17,323, followed by 17,287 and 17,228. If the index moves up, the key resistance levels to watch out for are 17,439, followed by 17,475 and 17,534.
Nifty Bank
The Nifty Bank turned out to be an outperformer and climbed nearly 400 points or 1 percent to 40,307, forming a Bullish Engulfing pattern on the daily charts.
“The Bank Nifty bulls came back strong for the lower levels and managed to hold the support of 39,700. The index’s immediate resistance is at the 40,500 level and if it sustains above that level, it can witness a pullback rally till 41,000 where fresh Call writing is visible,” Kunal Shah, Senior Technical Analyst at LKP Securities said.
The index remains in a buy-on-dip mode as long as the mentioned support is held, he says.
The important pivot level, which will act as a support, is at 39,902, followed by 39,754 and 39,515. On the upside, key resistance levels are 40,380, followed by 40,528, and 40,767.
Call option data
On a weekly basis, the maximum Call open interest (OI) was seen at 18,500 strike, with 1.09 crore contracts, which may remain a crucial resistance level for the Nifty in the coming sessions.
This is followed by a 17,600 strike, comprising 1.06 crore contracts, and a 18,000 strike, where there are more than 88.26 lakh contracts.
Call writing was seen at 17,400 strike, which added 62.96 lakh contracts, followed by 17,500 strike which added 21.28 lakh contracts and 18,500 strike which added 18.66 lakh contracts.
We have seen Call unwinding at 18,100 strike, which shed 4.11 lakh contracts, followed by 18,300 strike which shed 3.32 lakh contracts, and 18,200 strike which shed 1.18 lakh contracts.
Put option data
On a weekly basis, we have seen the maximum Put OI at 17,000 strike, with 68.85 lakh contracts, which is expected to act as a crucial support zone for the Nifty50 in the March series.
This is followed by the 17,400 strike, comprising 63.25 lakh contracts, and the 17,200 strike, where we have 44.7 lakh contracts.
Put writing was seen at 17,400 strike, which added 22.94 lakh contracts, followed by 17,000 strike, which added 14.43 lakh contracts and 17,200 strike which added 12.45 lakh contracts.
We have seen Put unwinding at 17,600 strike, which shed 15.19 lakh contracts, followed by 17,500 strike which shed 7.97 lakh contracts, and 17,700 strike which shed 3.27 lakh contracts.
Stocks with high delivery percentage
A high delivery percentage suggests that investors are showing interest in these stocks. The highest delivery was seen in Dabur India, Crompton Greaves Consumer Electricals, Hindustan Petroleum Corporation, Sun Pharma, and Dalmia Bharat, among others.
27 stocks see a long build-up
An increase in open interest (OI) and an increase in price mostly indicate a build-up of long positions. Based on the OI percentage, 27 stocks including Bosch, Can Fin Homes, GAIL India, ICICI Bank, and Axis Bank saw a long build-up.
49 stocks see long unwinding
A decline in OI and a decrease in price, in most cases, indicate long unwinding. Based on the OI percentage, 49 stocks including Zee Entertainment Enterprises, TVS Motor Company, Zydus Life Sciences, Aarti Industries, and Bajaj Auto, witnessed a long unwinding.
88 stocks see a short build-up
An increase in OI accompanied by a decrease in price mostly indicate a build-up of short positions. Based on the OI percentage, 88 stocks including Mphasis, Escorts, GNFC, Hindustan Petroleum Corporation, and Indraprastha Gas, saw a short build-up.
28 stocks see short-covering
A decrease in OI along with an increase in price is an indication of short-covering. Based on the OI percentage, 28 stocks were on the short-covering list. These included Coromandel International, MCX India, SBI Life Insurance Company, Ashok Leyland, and State Bank of India.
Bulk Deals
Investors’ meetings on February 28
BLS International Services: Officials of the company will interact with Mondrian Investment Partners.
FSN E-Commerce Ventures: The company’s officials will meet Ashmore Investment Management.
HCL Technologies: The company’s officials will participate in Global IT Services Virtual Investor Trip hosted by Citi.
Syrma SGS Technology: The officials of the company will interact with clients of Nuvama Wealth.
DCX Systems: The company’s officials will meet Sequent Investments.
Anupam Rasayan India: The management team of the company will participate in Investment Promotion Roadshow in Japan.
Crompton Greaves Consumer Electricals: The company’s officials will meet Mackenzie Financial Corporation, Hong Kong.
Escorts Kubota: Officials of the company will interact with HDFC Mutual Fund, and Principal Global Investors.
Clean Science and Technology: The company’s officials will meet several funds and investors in a non-deal roadshow in Mumbai.
JSW Energy: Officials of the company will participate in Deutsche Bank India – Fixed Income Conference 2023.
Ircon International: Management of the company will participate in an institutional investor meeting with Aditya Birla Mutual Fund.
PI Industries: The company’s officials will meet Walter Scott.
UltraTech Cement: Officials of the company will interact with BlackRock Investment Management, and Fullerton Fund Management.
Stocks in the news
Zee Entertainment Enterprises: National Company Law Appellate Tribunal (NCLAT) has granted a stay on the NCLT order with respect to IBC proceedings initiated against Zee. Accordingly, Zee will move out of the IBC framework, and the corresponding surveillance actions on the company will be reverted. Further, F&O contracts with May 2023 expiry for Zee will be available for trading with effect from February 28.
Tata Steel: The steel major has received approval from the Committee of Directors for allotment of 2.15 lakh non-convertible debentures, with an 8.03 percent fixed coupon rate, having a face value of Rs 1 lakh, amounting to Rs 2,150 crore, for a tenor of 5 years, to identified investors on private placement basis. The NCDs are proposed to be listed on the Wholesale Debt Market Segment of BSE.
GIC Housing Finance: The housing finance company has received board approval for the allotment of 32,500 non-convertible debentures (NCDs) with 8.7 percent per annum interest, having a face value of Rs 1 lakh each, amounting to Rs 325 crore on Private placement basis. The NCDs are proposed to be listed on BSE.
Mastek: The IT services company has signed a strategic partnership with Netail, to help e-commerce and omnichannel retailers optimise their retail value chain and thereby attract, convert, and retain digital consumers.
NHPC: The Cabinet Committee on Economic Affairs has given its approval for incurring expenditure on pre-investment activities and various clearances for Dibang multipurpose project (MPP), in Arunachal Pradesh for Rs 1,600 crore. The project is being developed by NHPC and the estimated total cost of the project is Rs 28,080.35 crore including IDC & FC of Rs 3,974.95 crore at June 2018 price level. The estimated completion period for the project will be nine years from receipt of government sanction. This is the largest ever hydroelectric project to be constructed in India.
Mahindra Logistics: Yogesh Patel has resigned as Chief Financial Officer of the company, to pursue his professional interests outside the Mahindra group. Yogesh Patel will be relieved of his duties on March 10 this year.
Vodafone Idea: The Capital Raising Committee of Vodafone Idea allotted 12,000 optionally convertible debentures of FV of Rs 10 lakh each, amounting to Rs 1,200 crore, to ATC Telecom Infrastructure. The balance 4,000 OCDs will be allotted upon receipt of application form and subscription money.
Wipro: The IT services company has announced four strategic global business lines to deepen alignment with client priorities. The company will seek clients’ evolving business needs and capitalise on emerging opportunities in high-growth segments of the market.
Laxmi Organic Industries: Satej Nabar has resigned as ED and CEO of the company with effect from April 2 this year. The company has appointed Rajan Venkatesh as MD & CEO with effect from April 3 and Ravi Goenka will step down as MD on the same day.
Fund Flow
FII and DII data
Foreign institutional investors (FII) sold shares worth Rs 2,022.52 crore, whereas domestic institutional investors (DII) bought shares worth Rs 2,231.66 crore on February 27, the National Stock Exchange’s provisional data showed.
Stocks under F&O ban on NSE
The National Stock Exchange has not added any stock on its F&O ban list for February 28. Securities banned under the F&O segment include companies where derivative contracts have crossed 95 percent of the market-wide position limit.