Market Overview
On Wednesday, the Indian stock market opened with a slight increase, driven by gains in auto stocks as companies started releasing their June sales figures. However, the overall gains were constrained due to ongoing uncertainty surrounding the stalled US-Iran diplomatic talks.
The Nifty 50 index rose by 0.22% to reach 23,919, while the BSE Sensex climbed 0.26% to 76,691.47 by 9:19 a.m. IST. This modest rise was influenced by positive developments in the auto sector, but investor sentiment remained cautious due to geopolitical tensions.
Iran's decision not to engage in talks with senior US envoys has raised concerns about the potential for a lasting resolution to the conflict, leading to a more conservative approach among investors. Additionally, Brent crude oil prices hovered near $73 per barrel, and broader Asian markets experienced a slight decline of 0.3%, indicating a subdued appetite for risk.
Market Outlook
According to Jay Thakkar, Vice President & Head of Derivatives and Quant Research at ICICI Securities, the Nifty 50 has been trading within a specific range, currently between 24,200 and 23,800 levels. The broader range is 23,600 to 24,200, depending on how the index performs.
Options data suggests that the highest call base for the July series is at 24,000 levels. Since the Nifty 50 has closed below this level, there could be further weakness until it closes above these levels. The July futures have just crossed above 24,000, indicating that this level serves as an immediate support. A drop below this could push the index to 23,800 or even 23,600.
On the upside, 24,200 is the next key hurdle. If the index manages to close above this level, it could move towards 24,500. The India VIX, which measures volatility, remains at lower levels, but with the Q1 result season approaching, a dip below 12 levels is unlikely. Therefore, the VIX is expected to remain within the 12-16 range for July.
Investors should consider buying dips near 23,600 or above 24,200 levels to achieve a better risk-to-reward ratio.
Bank Nifty Analysis
Bank Nifty also closed below the critical 58,000 level, which had been a significant barrier throughout the second half of the June series. Although the July futures closed marginally above 58,000, sustained movement above this level could signal a recovery. Otherwise, further weakness may push the index to the previous base at 57,000.
On the upside, resistance is expected near 58,500. A breakout above this level could confirm a fresh upward trend, aiming for 60,000. Until then, consolidation within the range of 58,500 to 57,000 is likely.
Recommended Stocks for Near-Term Investment
Jay Thakkar recommends the following stocks for near-term investment:
- Mazagon Dock
- Buy Futures in the range of 2,490-2,510 with a stop loss below 2,440
- Targets: 2,600-2,650
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The stock has shown a breakout from a falling channel, supported by increased open interest. Short covering is expected to drive the price upwards. The highest call base is at 2,500, and a close above this level could lead to targets of 2,600 and beyond.
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Torrent Pharma
- Buy Futures in the range of 4,650-4,685 with a stop loss below 4,570
- Targets: 4,800-4,900
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Torrent Pharma has broken out of an ascending triangular pattern, with increased open interest indicating long built-up. Put additions on the put side from 4,400-46,00 strikes are positive signs. Significant call bases at 4,800 and 4,900 may act as resistance.
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Mankind Pharma
- Buy Futures in the range of 2,540-2,560 with a stop loss below 2,480
- Targets: 2,620-2,660
- Mankind Pharma has broken out of a falling trend line, with increased open interest suggesting long built-up. Previous declines were due to long unwinding, and a breakout is expected to drive the price towards recent highs. A significant call base at 2,600 indicates potential for further gains.
Disclaimer
The views and recommendations provided in this analysis are those of individual analysts or broking companies and do not reflect the views of Mint. Investors are strongly advised to consult certified experts before making any investment decisions, as market conditions can change rapidly and individual circumstances may vary.
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