Market Overview 14th Oct'24: Bulls Charge Dalal Street

On October 14, 2024, Indian markets saw a robust performance as bulls took charge, leading to significant gains for major indices. After a few range-bound sessions, the Nifty managed to climb above 25,150, showing intraday strength, while the Sensex also ended on a positive note. This rally was driven by strong buying across most sectors, with the exception of metals and media. The optimistic sentiment was underpinned by positive global cues, which helped in maintaining the market momentum throughout the day.

Indices Performance: Nifty and Sensex Climb Higher

The trading session ended with the Sensex gaining 591.69 points, or 0.73%, closing at 81,973.05. Similarly, the Nifty surged by 163.70 points, or 0.66%, to settle at 25,128. This rise marked a successful break from previous consolidation phases, signaling a stronger upward trend. IT, realty, and banking stocks were the top contributors to this bullish movement, driving the Nifty past the 25,150 mark during intraday trading.

Sectoral Analysis: IT, Realty, and Banking Stocks Lead

Throughout the trading session, buying activity was prominent across various sectors. Information Technology, realty, and banking stocks emerged as the top performers, each recording approximately a 1% increase. On the other hand, metal and media sectors were the only ones to end in the red, showing a lack of investor interest. The strong performance in key sectors helped sustain the overall market rally, reinforcing the bullish sentiment.

Top Gainers and Losers

Key gainers on the Nifty included Wipro, Tech Mahindra, HDFC Life, L&T, and HDFC Bank, all of which showed notable gains. Conversely, some major companies like ONGC, Maruti Suzuki, Tata Steel, Bajaj Finance, and Adani Enterprises ended the session in the red. This mixed performance indicates selective buying, particularly favoring sectors poised for growth.

Midcap and Smallcap Stocks: Mixed Performance

The BSE midcap index recorded a modest gain of 0.3%, while the smallcap index ended almost flat, indicating a relatively subdued performance compared to the large-cap indices. Despite this, over 240 stocks on the BSE reached their 52-week highs, reflecting strong underlying market confidence. Among these were prominent names like Aptus Value, Oberoi Realty, Tech Mahindra, Persistent Systems, and HCL Technologies.

Market Outlook for October 15

According to Aditya Gaggar, Director of Progressive Shares, the market's positive momentum is likely to continue, especially if Nifty can move convincingly above the 25,200 resistance level. The immediate support for Nifty is seen at the psychological level of 25,000, while resistance lies between 25,160-25,200. Technical patterns, including a bullish Marubozu candlestick on the daily chart, further support this upward trend. However, sustained movement in the lower timeframes will be key to confirming this breakout.

Technical Analysis Insights

Jatin Gedia, Technical Research Analyst at Sharekhan by BNP Paribas, observed that the Nifty opened with a gap-up and maintained a positive bias throughout the day, closing with gains of around 164 points. He anticipates continued upward movement towards the 25,500 mark, as indicated by a positive crossover in the hourly momentum indicator. This buy signal suggests that the Nifty's recent consolidation phase has concluded, with support shifting higher to 24,920.

Similarly, the Bank Nifty index broke out of a three-day consolidation period, moving towards the 52,500 level. Support for this index has also shifted higher, indicating the potential for further gains.

Conclusion: Positive Momentum Expected to Persist

The Indian stock market showed a strong performance on October 14, 2024, driven by gains in IT, realty, and banking stocks. With positive global cues and supportive technical patterns, the outlook for the next trading session remains optimistic. Analysts expect Nifty to maintain its upward trajectory if it can breach resistance at 25,200, while Bank Nifty also shows potential for further gains. Investors are advised to remain cautious yet optimistic, as market conditions indicate a continuation of this bullish trend in the near term.Bottom of Form

 

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Oil Surges Following Iran’s Attack on Israel, Raising Fears of Supply Disruptions

Global oil prices soared for the second consecutive day after Iran launched 200 ballistic missiles at Israel, prompting a vow of retaliation from Israeli Prime Minister Benjamin Netanyahu. This escalation has intensified concerns about potential disruptions in crude oil supplies, particularly as the Middle East is responsible for nearly one-third of the world's oil production.

Brent Crude Reaches New Heights

Brent crude, the global oil benchmark, surged beyond $74 per barrel after briefly spiking by more than 5% following the Iranian assault. West Texas Intermediate (WTI), the U.S. oil benchmark, also climbed, nearing $71 per barrel. Despite these increases, both Brent and WTI remained below their previous peaks.

Risk Premiums and Safe Haven Assets Surge

Investors are increasingly pricing in a renewed risk premium on oil, a crucial global commodity. The attack has also driven up the value of safe haven assets such as bonds, gold, and the U.S. dollar as the risk of further conflict in the region looms large.

Historical Context and Current Conflict

The conflict between Israel and Iran dates back to the outbreak of the Gaza war nearly a year ago, where Tehran-backed Hamas has been at the center of hostilities. Despite this long-standing conflict, oil price spikes due to tensions have historically been short-lived unless accompanied by direct disruptions to oil production. In August 2024, Iran was producing approximately 3.4 million barrels of oil per day, according to OPEC.

Potential Impact on Energy Infrastructure

Experts warn that energy infrastructure could become a target in this escalating conflict. RBC Capital Markets notes that Iran's Kharg Island export facilities could be at risk, and Iran and its allies might attack energy installations to internationalize the conflict if it intensifies.

Middle East Tensions Heightened by Hezbollah Chief's Death

The situation in the Middle East has further escalated after the killing of Hezbollah's leader, Hassan Nasrallah, which prompted Israeli airstrikes on Beirut. In response, Israeli troops have initiated targeted ground raids in Lebanon. Hezbollah, like Hamas, is backed by Tehran, and the possibility of these proxy conflicts expanding is increasing.

Statements from Leaders

Following the missile attack, Iran's Foreign Minister Abbas Araghchi stated that their action was concluded unless Israel retaliates further. Netanyahu responded with a strong statement, asserting that Iran had made a grave mistake and would face consequences.

Future of Oil Prices

Analysts from ANZ Group Holdings suggest that any sustained rally in oil prices will depend on whether Israel responds with a direct military strike on Iran, particularly targeting its military, infrastructure, or oil industry.

OPEC+ Meeting

OPEC+ is scheduled to hold an online meeting to review global oil markets. The group is expected to discuss reviving some of its idled production starting in December, after previously delaying the plan.

In the U.S., the American Petroleum Institute reported a 1.5 million barrel decline in nationwide crude inventories, marking the third consecutive weekly drop if confirmed by official figures.

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Technical View: Nifty Eyes 26,000 Milestone, Bank Nifty Crosses 54,000 for the First Time

On September 23, 2024, the Nifty 50 maintained its upward trajectory, moving closer to the key psychological barrier of 26,000. With this bullish momentum, the index is expected to breach the 26,000 level in upcoming sessions. However, experts emphasize that sustainability beyond this mark will be crucial for continued gains. On the downside, 25,800 is expected to serve as immediate support, while 25,500 will be a crucial level to watch.

Nifty 50 Performance: The Nifty 50 opened higher at 25,873 and remained in positive territory throughout the day. It touched a new intraday high of 25,956 before consolidating slightly and closing at 25,939, gaining 148 points. This marked a new record close for the index, which has been on a winning streak for three straight sessions. On the technical front, the index has formed a bullish candlestick pattern on the daily charts, bolstered by positive trends in momentum indicators like the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD).

Expert Analysis: Shrikant Chouhan, Head of Equity Research at Kotak Securities, pointed out that the daily charts show a bullish candlestick formation, indicating further upward movement. The index has been forming a "higher highs-higher lows" pattern, which reinforces its positive momentum. However, Chouhan warns that despite the bullish market sentiment, overbought conditions could lead to a period of rangebound activity in the short term. For day traders, the 25,850–25,800 zone will act as strong support, while the immediate resistance levels lie between 26,050 and 26,100. If Nifty fails to hold above 25,800, the uptrend could be at risk, prompting traders to exit long positions.

Options Data: Analysis of monthly options data reveals that the maximum Call open interest is at the 27,000 strike price, suggesting this could be a medium-term target for the Nifty 50. Other key levels include 26,000 and 26,500 strikes. The highest Call writing was observed at the 27,000 strike, followed by the 25,900 and 26,400 strikes, indicating that 26,000 is a critical resistance point. On the Put side, the 25,000 strike holds the maximum open interest, with 25,500 and 25,700 being other significant levels. Put writing was most active at the 25,900 and 25,800 strikes, further confirming that 26,000 is a key resistance level, while support is solid around 25,800.

Bank Nifty: The Bank Nifty index also continued its rally for the eighth consecutive session, crossing the 54,000 mark for the first time. It rose by 313 points to close at 54,106, forming a bullish candlestick pattern on the daily charts, supported by strong momentum indicators. According to Chandan Taparia, Senior Vice President and Analyst of Derivatives at Motilal Oswal Financial Services, the Bank Nifty needs to stay above the 53,750 zone to maintain its upward movement towards 54,500 and 55,000 levels. On the downside, support has shifted higher to 53,750, with additional support at 53,500.

Volatility and India VIX: Volatility saw a sharp increase, though it remained at relatively low levels below the 14 mark. The India VIX, often referred to as the "fear gauge," rose by 7.78% to 13.79 from 12.79 in the previous session. If the VIX climbs above the 15 mark and sustains, it could signal increased caution for bulls, as higher volatility could lead to more unpredictable market movements.

Outlook: While the overall market sentiment remains bullish, experts are keeping a close eye on key levels. Nifty is expected to test the 26,000 resistance soon, but sustainability beyond this point will be crucial. A correction could be on the cards if the index fails to hold above 25,800. Meanwhile, the Bank Nifty's strength signals continued upward momentum for banking stocks, with the index aiming for 54,500–55,000 levels in the near term.

In conclusion, while the market is in a bullish phase, short-term caution is advised as overbought conditions and rising volatility may lead to consolidation or minor corrections. Traders are encouraged to adopt a trailing stop-loss strategy to safeguard their gains, particularly if Nifty struggles to maintain its momentum beyond the 26,000 level.

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MCX Trading Resumes After Technical Glitch

On February 13, 2024, the Multi Commodity Exchange of India (MCX) faced a significant delay in trading due to a technical glitch. Initially scheduled to begin at 9 AM, the exchange was forced to revise its trading hours multiple times throughout the morning. First, the opening was postponed to 10 AM, then to 11 AM, and finally, trading commenced at 1 PM. This delay affected the commodity derivatives segment, leading to widespread disruptions.

According to a circular issued by MCX, the technical issues stemmed from its commodity derivatives trading platform. Both MCX's internal team and its technology partner, Tata Consultancy Services (TCS), were actively working to fix the problem. Zerodha and Upstox, two prominent brokerage firms, were among the first to report the delay via Twitter.

Despite the technical difficulties at MCX, the overall market showed resilience. By the time trading resumed at 1 PM, the Sensex had climbed 0.2% to reach 71,191 points, reflecting marginal gains in the equity markets. Brokers, however, expressed concerns about delays in receiving key files—such as position, margin, and trade files—from MCX, which affected the processing of trades from the previous session.

Shrey Jain, founder and CEO of SAS Online, stated, "Brokers are awaiting their position, margin, and trade files from the MCX. Without these, the processing of the previous trading session remains pending. Once the files are received, we will complete the beginning-of-day process and prepare the system for today's trading." This incident underscores the importance of technological reliability in modern financial markets, where even short-term glitches can have significant ripple effects. The incident has sparked a discussion on the robustness of India's trading platforms and their contingency plans in the event of technical failures.

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Bulk Deals: RK Damani Reduces Stake in VST Industries

On September 17, 2024, Radhakishan Damani sold a 0.64% stake, equivalent to 100,000 shares, in VST Industries at an average price of ₹439.19 per share through a bulk deal. Damani's stake in the company was 3.47% as of June 30.

In other notable transactions, Ambit Investment Advisors acquired 861,000 shares of Menon Bearings at an average price of ₹120, while promoter Nitin Ram Menon sold 973,000 shares at an average price of ₹120.01. Menon's stake was 29.29% as of June 20.

Jitendra Mohandas Virwani sold 1.03% of his stake, or 121,000 shares, in MRO-TEK Realty at an average price of ₹120.34. Virwani held a 19.83% stake in the company as of June 30.

SBI Mutual Fund purchased 4.5 million shares, representing a 1.25% stake, in Nuvoco Vistas Corp at an average price of ₹352 per share. The Kotak Special Situations Fund sold an equivalent amount of shares at the same price. Kotak Special Situations Fund's stake was 3.54% as of June 30.

Additionally, BNP Paribas Financial Markets acquired 600,000 shares of Remsons Industries at an average price of ₹190.20.

Block Deals Highlights

On September 17, approximately 5.596 million shares were traded through block deals:

• Nuvoco Vistas Corp: Kotak Special Situations Fund sold 4.5 million shares (1.25%) at ₹352 per share to SBI Mutual Fund. The stock closed 3.79% higher at ₹364.10.

• Trent: Dodona Holdings Limited sold 1.096 million shares (0.3%) at ₹7,330 per share, with Siddhartha Yog as the buyer. The stock ended 1.1% higher at ₹7,400.

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