Trade Setup For Nov. 5: Nifty 50 Sees Support At 23,800 Ahead Of US Elections

Market sentiment remained highly pessimistic, with all sector indices closing in the red, according to Ameya Ranadive, a chartered market technician at StoxBox.

We have identified the most immediate support level for the Nifty 50 near 23,900. Should this level be breached, there is a potential for further exacerbation of the current market weakness,” he said.

The current market texture is weak but oversold, according to Shrikant Chouhan, head equity research at Kotak Securities. “The strong possibility of one intraday pullback rally is not ruled out from the current levels.”

According to the analyst, the 23,800 mark for the NSE Nifty 50 would act as a key support zone, and above the same, it could bounce back till 24050-24100.

“On the flip side, fresh selloff is possible only after dismissal of the 23,800 mark. Below the same, the market could slip till 23700-23625,” he said.

“On the level-specific front, a series of stiff resistance could be seen around the 24200-24400 subzone, and a sustained breakthrough could only direct for potential reversal from the ongoing carnage, said Osho Krishan, senior analyst, technical and derivatives at Angel One Ltd.

“In the meantime, the US election, which is due in a day, is likely to raise the volatility bar and needs to be tracked closely for the intermediate trend analysis,” he said.

F&O Cues

The Nifty November futures were down by 1.16% to 24,114 at a premium of 119 points, with the open interest up by 5.13%.

The Nifty Bank November futures were down by 0.76% to 51,552 at a premium of 337 points, while its open interest was up 2.7%.

The open interest distribution for the Nifty 50 Nov. 7 expiry series indicated most activity at 27,000 call strikes, with the 22,450 put strikes having maximum open interest.

For the Bank Nifty options expiry on Nov. 6, the maximum call open interest was at 60,500 and the maximum put open interest was at 43,000.

FII/DII Activity

Overseas investors remained net sellers of Indian equities for the 26th consecutive session on Monday, while domestic institutional investors turned net buyers after a session of selling.

Foreign portfolio investors offloaded stocks with an approximate value of Rs 4,329.8 crore and the DIIs bought stocks worth Rs 2,936.1 crore, according to provisional data from the National Stock Exchange.

Market Recap

India's benchmark stock indices, NSE Nifty 50 and BSE Sensex, closed at their lowest levels in over a month on Monday, led by declines in Reliance Industries Ltd. and HDFC Bank Ltd.

The Nifty 50 settled 309.00 points, or 1.27%, lower at 23,995.35, and the Sensex fell 941.88 points, or 1.18%, to end at 78,782.24.

Major Stocks In News

Deepak Builders: The company emerged as lowest bidder for construction project worth Rs 153 crore.

Global Cues 

Stocks in the Asia-Pacific region opened mixed as uncertainty mounted ahead of election day in the US and upcoming Federal Reserve's policy meeting.

Equity benchmarks in South Korea and Australia opened lower while the Japanese stocks were marginally higher. The Nikkei was 137 points, or 0.32%, higher at 38,137, while the Kospi was down 19 points, or 0.76%, at 2,570 as of 5:35 a.m.

Stocks in China closed higher on Monday as the government announced measures to attract foreign investments by allowing them to provide capital for publicly traded firms as strategic investors.

Amidst the volatility of the US election, traders will also eye the Reserve Bank of Australia's decision regarding its key policy rates. The Australian central bank is set to keep rates status quo at a 13-year high of 4.35%, according to Bloomberg.

Wall Street closed slightly lower with the dollar dropping the most since August. The S&P 500 and Dow Jones Industrial Average declined 0.28% and 0.61%, respectively, while the Nasdaq Composite slipped 0.33%.

Brent crude was trading 2.71% higher at $75.08 a barrel as of 6:00 a.m. IST. West Texas Intermediate was down 0.01% at $71.46.   

Money Market

The Indian rupee weakened by 3 paise on Monday to close at a record low of 84.11 against the US dollar, continuing a downward trend. Earlier in the day, the rupee dipped to an all-time low of 84.12 before slightly recovering.

The local currency closed at 84.08 on Friday, but ongoing pressure from foreign institutional investors has pushed the rupee further down.