The Indian stock market is expected to remain volatile on Thursday as sentiment remains subdued over the elevated crude oil prices and rising global bond yields.
The benchmark equity indices extended their losing streak in the previous session to a hit three-month low amid strong selloff across most sectors. The Sensex cracked over 800 points, and the Nifty 50 slipped below 23,500 level.
According to Jay Thakkar, Vice President & Head of Derivatives and Quant Research, ICICI Securities, the level of 23,800 remains an immediate resistance on the upside for Nifty 50 and above that, 24,000 which has the highest call base now.
“The next put base is now at 23,000 levels; hence the broader range is 23,000 – 24,000 levels. However, the index has a high chance of testing the lower end of the range,” Thakkar said.
He expects the India VIX to test the upper end of the range i.e. 15-16 levels on an immediate basis, which he believes will not be a good sign. Moreover, crude oil prices above $100 a barrel, rising US treasury yields and risk of US Federal Reserve interest rate hike can lead to risk off in global equities.
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“So, now until there is no sharp reversal in international crude oil prices and until Nifty does not close above 23,800 levels, the trend will be negative to sideways. Hence, sell and sell on rise should be the strategy,” Thakkar said.
Bank Nifty Outlook
Bank Nifty ended 482.00 points, or 0.85%, lower at 56,295.55 on Wednesday, slipping below the short-term support of 57,000 level.
“The next support for Bank Nifty index lies at 55,000 level, which has the decent put base on a cumulative basis of the next three series. On the upside, 57,000 to 57,500 range will act as a stiff resistance, and until it closes above the same, the overall trend is likely to be negative to sideways,” Thakkar said.
The max pain level is 57,500, hence, a close above the same is critical in order to reverse the ongoing downtrend, he added.
Stocks To Buy Or Sell Today
Jay Thakkar has recommended two stocks to buy today and one stock to sell. He suggests buying CG Power and Industrial Solutions and Apollo Hospitals Enterprise stock futures, while selling Bharat Dynamics stock futures.
CG Power | Buy | Target: Rs 955–970 | Stop Loss: Rs 900
CG Power and Industrial Solutions has witnessed long additions, along with a pattern of higher highs and higher lows, indicating a positive trend.
Options data also supports the bullish setup, with significant put additions between the Rs 840 and Rs 920 strikes, coupled with call unwinding at the Rs 900 strike. This suggests that bulls have the upper hand, according to Thakkar.
The stock is trading well above its max pain level of Rs 900, making the level a key near-term support. As long as Rs 900 holds on a closing basis, the short-term trend is expected to remain positive, with the stock likely to outperform amid the broader market downtrend.
Thakkar recommends buying CG Power futures in the Rs 920–930 range, with targets of Rs 955 and Rs 970, while maintaining a stop loss below Rs 900.
Apollo Hospitals Enterprise | Buy | Target: Rs 9,200–9,300 | Stop Loss: Rs 8,860
Apollo Hospitals futures have broken out of a sideways consolidation, while earlier long additions indicated a positive underlying trend.
Options data further supports the bullish view, with significant put additions across the Rs 8,700–9,000 strikes, along with call unwinding. The stock is also trading comfortably above its max pain level of Rs 8,800, which is expected to act as near-term support, Thakkar said.
He recommends buying Apollo Hospitals futures in the Rs 8,980–9,010 range, with targets of Rs 9,200 and Rs 9,300. The stop loss should be maintained below Rs 8,860.
Bharat Dynamics | Sell | Targets: Rs 1,140–1,120 | Stop Loss: Rs 1,245
Bharat Dynamics has broken below its consolidation range, accompanied by a rise in futures open interest, indicating fresh short build-up.
While the Nifty Defence sector has seen buying interest recently, most F&O stocks, apart from HAL, have only witnessed a partial rebound and have not seen significant short covering. Bharat Dynamics' breakdown has now shifted its trend from sideways to negative.
Options data indicates limited support below Rs 1,240, as the stock has breached its major put base. At the same time, strong call additions have emerged at the Rs 1,260–1,300 strikes, indicating increased resistance, Thakkar said.
He recommends selling Bharat Dynamics futures in the Rs 1,210–1,195 range, with targets of Rs 1,140 and Rs 1,120. The stop loss should be maintained above Rs 1,245.
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