11,100 crucial for Nifty; oversold stocks may see some bounce

Probably not a manic Monday but 6 straight sessions of decline put bulls on the back foot for now.

In the last six sessions of losses, both Sensex and Nifty have come off nearly 4 percent while the overall market capitalisation of BSE-listed firms has dropped by more than Rs 6 lakh crore.

Analysts said the market continued its recent trend due to the lack of fresh triggers and the second-quarter earnings will dictate the mood of the market in the near-term.

Well, the sentiments were already down after MPC slashed its growth forecast to 6.1 percent from 6.9 percent earlier which is likely to weigh on the second-quarter earnings as well.

Defensive bet Pharma declined due to increasing US FDA observations while IT slid ahead of kickstart in second-quarter earnings.

Experts suggest that we may see some bounce due to oversold positions in the index but the bias would remain on the negative side.

More than 350 stocks hit fresh 52-week low which includes names like Piramal Enterprises, IndusInd Bank, Lupin, Grasim Industries, PNB Housing Finance, LIC Housing Finance, Aurobindo Pharma, etc. among others.

Sectorally, the S&P BSE Consumer Durable index rose 1 percent, followed by Telecom and Bankex which were up 0.2-0.3 percent, respectively.

On the losing front, the BSE Healthcare index fell 2.4 percent, followed by BSE Oil & Gas index which was down 1.8 percent, and the Capital Goods index fell 1.65 percent.

Top Nifty gainers include names like Bajaj Auto, Axis Bank, Bharti Airtel, and YES Bank.

Top Nifty losers include names like JSE Steel, Indiabulls Housing Finance, and BPCL.

The rupee depreciated by 14 paise to close at 71.02 against the US dollar on Monday as profit booking in domestic equities and unabated foreign fund outflows kept investors edgy.

On the institutional front, FPIs were net sellers in Indian markets for Rs 494 crore while the DIIs were net buyers to the tune of Rs 904 crore, provisional data showed.

Technical View:

Nifty formed a bearish candle on the daily charts.

The index is now below 200-DMA, 100-DMA, and the next big support for the index is placed at 50-DMA i.e. 11,087

A break below 10,959 could change the trend for the markets according to ‘Supertrend indicator’ – MACD has already given a bearish crossover today

The level of 11,100 (Swing low of May) appears to be the critical support on closing basis breach of which shall confirm the failure of the recent breakout as index spent a considerable amount of time in the zone of 10,700.

In such a scenario, on the downsides, a new target of 10,875 shall open up.

Experts suggest that upsides shall remain capped around 11,400 levels and rallies towards 11,200 shall be considered as an opportunity to create fresh short positions with a stop above 11,235 on a closing basis.

Three levels: 10,985, 11,110, 11,400

Max Call OI: 11,500, 12,000

Max Put OI: 11,000, 10,800

Technical Recommendations:

We spoke to HDFC Securities and here’s what they have to recommend:

Muthoot Finance: Buy| LTP: Rs 670| Target: Rs 720| Stop-Loss: Rs 635| Upside 7.5%

Lupin: Sell| LTP: Rs 668| Target: Rs 610| Stop-Loss: Rs 709| Downside 9%

Bank of Baroda: Sell| LTP: Rs 87.25| Target: Rs 80| Stop-Loss: Rs 92| Downside 8%

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