Nifty to top 19600 or US downgrade to drag- See GIFT Nifty, FII data, F&O ban, crude, more before market opens

Nifty to top 19600 or US downgrade to drag? See GIFT Nifty, FII data, F&O ban, crude, more before market opens

The GIFT Nifty traded higher during Thursday’s early trading session, up by 0.14% at 19,527, indicating a mildly positive opening for domestic indices NSE Nifty 50 and BSE Sensex. Benchmark indices NSE Nifty 50 and BSE Sensex ended in the red after tanking in trade on Wednesday, as global markets fell on Fitch Ratings’ downgrade of US credit ratings. The Nifty 50 gave up 207 points to close at 19,526.55. On the other hand, Sensex slipped 1.02% to end at 65,782.78.

“The Indian market witnessed a broad sectoral slide, affected by weak global market trends. Negative news regarding the US rating downgrade on fiscal concerns, coupled with weak factory activity data from Eurozone and China, led to widespread worries across the globe. Additionally, prolonged FII selling, triggered by a rise in US bond yields, has disrupted the mood of the domestic market,” said Vinod Nair, Head of Research at Geojit Financial Services.

Asian Markets

Shares in the Asia-Pacific region were trading in the red on Thursday, extending the global rout. China’s Shanghai Composite and Shenzhen Component were down by 0.22% and 0.33% respectively. Japan’s Nikkei 225 tanked 1.32%. South Korea’s Kospi advanced 0.15% while Hong Kong’s Hang Seng fell 0.58%. The Taiwan Weighted index recorded a loss of 1.85%.

Crude Oil

Oil prices settled down 2% on Wednesday despite a historic drop in U.S. crude stocks, as traders derisk following the downgrade of the U.S. government’s top credit by a major ratings agency. U.S. crude stocks fell in the week by 17 million barrels, the largest drop in U.S. crude inventories according to records dating back to 1982.

FII/DII Data

Foreign institutional investors (FII) sold shares worth net Rs 1,877.84 crore, while domestic institutional investors (DII) offloaded shares worth net Rs 2.23 crore on 2 August, according to the provisional data available on the NSE.

F&O Ban

The National Stock Exchange has Hindustan Copper, Gujarat Narmada Valley Fertilizers & Chemicals, Piramal Enterprises and Indiabulls Housing Finance securities on its F&O ban list for 3 August. According to the NSE, stocks are prohibited in the F&O sector when they have exceeded 95% of the market-wide position limit (MWPL). During the F&O ban period, no new positions are permitted for F&O contracts in that stock.

Bank Nifty Outlook

“Bank Nifty has also witnessed a sharp decline and it has decisively closed below the 20-day moving average (45,400) which is a sign of weakness. With the daily momentum indicator also having a negative crossover which is a sell signal, thus, both the price and momentum indicator is suggesting a further correction. On the way down 44,000 is the short-term target with a reversal placed at 45,800,” said Jatin Gedia – Technical Research Analyst at Sharekhan by BNP Paribas.

Technical View

“The short term trend of Nifty has turned down and one may expect more weakness in the coming days. The next crucial lower supports to be watched around 19,200-19,100 levels in the coming week. Any pull back rally up to 19,600-19,650 could be a sell on rise opportunity,” said Nagaraj Shetti, Technical Research Analyst, HDFC Securities