Asian Markets Overview: Mixed Sentiment Prevails
NIFTY50 reached All Time High at 25100 today 26 August 2024, Trading session for August 26, the GIFT NIFTY indicates a positive start for the NIFTY50, showing a 0.9% uptick. However, the broader Asian markets present a mixed picture. Japan’s Nikkei 225 has dipped over 1%, reflecting cautious sentiment, while Hong Kong’s Hang Seng Index has risen by 1%, hinting at regional optimism.
U.S. Market Recap: Positive Close Amid Fed’s Policy Update
The U.S. markets closed strongly on Friday, driven by key statements from Federal Reserve Chair Jerome Powell at the Jackson Hole Symposium. The Dow Jones closed at 41,175, up by 1.1%, the S&P 500 gained 1.1% to close at 5,634, and the Nasdaq Composite surged by 1.4%, ending at 17,877. Powell emphasized the need for a balanced monetary policy, with a focus on employment risks rather than inflationary pressures. He also mentioned that the labor market is unlikely to fuel inflation, which reassured investors and spurred market gains.
NIFTY50 Outlook: Aiming to Fill the Second Bearish Gap
The NIFTY50 index extended its winning streak to seven consecutive sessions, closing above the 24,800 mark on Friday. The index has been consolidating at the lower end of the bearish gap formed on August 2, while trading above all key moving averages. Immediate support is seen around the 24,500 zone. Market participants will be closely watching how the index reacts to Powell’s recent remarks, as it attempts to fill the second bearish gap. If the NIFTY50 can close above 25,100, experts suggest that the uptrend could continue, potentially leading to new highs.
As the index approaches its previous all-time high, caution is advised. The potential for profit-taking increases as the NIFTY50 nears these critical levels. So far, the index has managed to maintain its upward trajectory by safeguarding the previous day’s low on a closing basis, with no clear reversal signals emerging.
In terms of open interest (OI), the highest resistance is observed around the 25,000 and 25,500 levels, with significant call option activity at these strikes. On the downside, support is concentrated at the 24,500 and 24,000 levels, with notable put option activity. The build-up at the 24,800 strike suggests that the index may see range-bound movement around this level.
BANK NIFTY Analysis: Indecision Amid Key Resistance Levels
The BANK NIFTY index, which is closely watched alongside the NIFTY50, made another attempt to reclaim the 51,000 mark but failed to close above it for the second consecutive day. The index formed a small red candlestick on the daily chart, signaling indecision among traders.
Technically, the BANK NIFTY is trading above its 20-day and 100-day moving averages, indicating a generally positive trend. However, for further upside, the index must breach the 51,100 level on a closing or intraday basis. A successful break above this level could pave the way for the index to challenge its 50-day moving average around 51,500. Conversely, a drop below 50,300 could trigger a decline toward the 49,600 support area.
Open interest data for the BANK NIFTY’s August 28 expiry shows the highest call and put bases at the 51,000 strike, suggesting that the index may experience range-bound movement around this level. Notable call additions at the 51,500 strike and put additions at the 50,500 strike further support this outlook. Traders looking for directional moves should keep a close watch on changes in OI at these critical levels.
Institutional Activity: Continued Buying by FIIs and DIIs
Both Foreign Institutional Investors (FIIs) and Domestic Institutional Investors (DIIs) were net buyers on August 23, contributing to a significant inflow of capital into the market. FIIs purchased equities worth ₹1,944 crore, while DIIs added ₹2,896 crore to their portfolios, resulting in a net institutional inflow of ₹4,840 crore. This continued buying activity by major institutions signals sustained confidence in the Indian markets.
Stock Movements: Key Long and Short Positions
In the Futures and Options (F&O) market, several stocks are showing notable trends. Long build-up, which indicates an increase in price along with open interest, was observed in Interglobe Aviation (Indigo), Bajaj Auto, Dixon Technologies, and TVS Motor. On the other hand, a short build-up, marked by a decrease in price with rising open interest, was seen in Deepak Nitrite, Indraprastha Gas, M&M Financial, Vedanta, Mahanagar Gas, and Zydus Lifesciences.
F&O Ban List Updates: New Additions and Removals
The F&O ban list saw some changes with LIC Housing Finance and Piramal Enterprises being removed, while Balrampur Chini was added. The current list of stocks under the F&O ban includes Aarti Industries, Aditya Birla Fashion and Retail, Birlasoft, Chambal Fertilisers, GNFC, Granules India, Hindustan Copper, IEX, India Cements, National Aluminium, RBL Bank, and Sun TV.
Conclusion: Navigating the NIFTY50 and BANK NIFTY
As we head into the trading session on August 26, market participants should keep a close eye on the NIFTY50’s attempt to fill the second bearish gap and potentially reach new all-time highs. The BANK NIFTY’s performance at key resistance levels will also be crucial. With mixed signals from global markets and ongoing institutional buying, traders should remain vigilant and prepared for possible profit booking as the indices approach critical levels.