The Nifty 50 is witnessing pressure at higher levels, no two ways about it. The index crossed the 19,500 mark in opening trade but never saw those levels after that through the day. After witnessing selling pressure in the final 30 minutes of trade, the index ended below the 19,400 mark in what was only its sixth session of declines over the last month.

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If one has to take some positives out of this, the Nifty 50 has consistently defended and found support within the 19,350 - 19,300 zone. That's the 223-point range the index has traded within over the last seven sessions - 19,300 to 19,523. Thursday may end up being volatile for the indices as it will be the weekly options expiry of the Nifty 50 contracts.

The index will also see reaction to results from two constituents - TCS, which had a slow quarter on expected lines, and HCLTech, which had a big miss on the margin front but maintained its full-year guidance.

"A long, negative candle was formed on the daily chart of the Nifty 50, indicating that it has no strength to surpass the crucial overhead resistance of 19,500," said Nagaraj Shetti of HDFC Securities. "A slip below 19,300 will result in the Nifty 50 falling towards its next support zone of 19,100 - 19,000," he added. Shetti expects fresh buying to emerge only above 19,500.

Rupak De of LKP Securities observed the formation of a bearish engulfing pattern on the Nifty 50's charts, but despite that, he maintains that the trend remains positive as long as the index holds above 19,300. "Below 19,300, the Nifty 50 may further drop towards 19,000 - 18,900," he said, adding that the index will find it difficult to cross 19,500.

The Nifty Bank was outperforming the Nifty 50 until the final 60 minutes of the trading day. But just like the benchmark, the banking index could not sustain at higher levels either. The index fell over 300 points from the day's high to end lower for the fourth day in a row. The index is slowly grinding lower towards its support levels of 44,500.

"On the upside, the immediate hurdle is now at 45,000 where maximum call writing is taking place," said Kunal Shah of LKP Securities. He sees downside support at 44,500 where is advises traders that they can initiate long positions in anticipation of a bounce.

Bears are having the upper hand currently in the Nifty Bank, said Ashwin Ramani of SAMCO Securities. He said that options activity at the 45,000 strike will be crucial for further direction to the index. Ramani also warned that a slip below 44,500 can further intensify the selling pressure in the index.

Another announcement pertaining to the Nifty Bank comes on the back of a shift in its weekly options expiry. All weekly contracts starting September 4, 2023 will expire on Wednesday instead of Thursday. However, the expiry of monthly and quarterly contracts will continue to happen on the last Thursday of the month.

More than TCS, the stock to watch out for on Thursday would be HCLTech, which would react to its quarterly results. The company had a big miss on revenue and margin in the June quarter but maintained its full-year guidance. Constant Currency growth also declined for the second quarter in a row.

“HCL Tech earnings shout out loudly that things are bad and they are getting probably worse. However the question is, whether it is only for the company and not for the sector as a whole," Prakash Diwan, market expert said.

"The HCL Tech earnings tell that companies which had lot of aggression to grow are the ones that have got impacted because the nature of contracts which companies like HCL Tech have, while they might be very good in good times, they probably are from businesses which may not want to continue spending at the same pace. So that is exactly why the revenue drop is so sharp and the head count has come off," he added.

What Are The F&O Cues Indicating?

There was no significant movement in Nifty 50's July futures, as they added only 3,100 shares in Open Interest on Wednesday. They are now trading at a premium of 77 points, compared to 61.45 points earlier. On the other hand, Nifty Bank's futures shed 7.8 percent or 2.09 lakh shares in Open Interest. Nifty 50's put-call ratio is now at 0.88 from 1.08 earlier.

Hindustan Copper has entered the F&O ban list from today's session, while India Cements, Indiabulls Housing Finance, Manappuram Finance, Punjab National Bank and Zee Entertainment continue to remain in the ban list.

BHEL, Delta Corp and Granules India are out of the F&O ban list. It will be interesting to see the reaction in Delta Corp today as the stock fell 23 percent on Wednesday, which was its biggest single-day drop on record. However, no fresh shorts were created as the stock was in the F&O ban.

Nifty 50 on the Call side for July 13 expiry:

For today's expiry, Nifty 50's call strikes between 19,400 and 19,600 have seen Open Interest addition, with the 19,450 strike seeing the maximum addition.

Nifty 50 on the Put side for July 13 expiry:

For the put strikes of the Nifty 50, the strikes between 19,200 - 19,300 have seen Open Interest addition for today's expiry, while the 19,500 put strike has seen Open Interest shedding.

Lets take a look at the stocks that added fresh long positions on Wednesday, meaning an increase in price and Open Interest:

Lets look at the stocks that added fresh short positions on Wednesday, meaning a decrease in price but increase in Open Interest:

Some stocks also saw unwinding of long positions on Wednesday, meaning a decrease in both price and Open Interest:

Here are the stocks to watch out for ahead of Thursday's session:

TCS: Subdued quarter, in-line with expectations. Slowest June quarter growth in a decade excluding Covid. Constant Currency Revenue growth slips to single-digits after nine quarters. North America, BFSI are weak, UK is strong. Order wins strong but hiring is muted.

HCLTech: Big miss on revenue and margin in June quarter. Constant Currency revenue slips to 1.3 percent versus CNBC-TV18 poll of 0.4-0.5 percent growth. Decline in constant currency revenue growth for second straight quarter. However, the management maintained its financial year 2024 revenue guidance.

Dr Reddy's Laboratories: Proposed biosimilar application for Rituximab accepted for review by the USFDA. Rituxumab used for treatment of arthritis, lymphoma and leukemia.

Aurobindo Pharma: APL Healthcare gets approval from the USFDA for Renagel generic or Sevelamer Hydrochloride. The drug is used to lower high blood phosphorus levels in patients who are on dialysis. Market size of the drug is $37 million.

SpiceJet: Promoter Ajay Singh to infuse Rs 500 crore into the company.

Patanjali Foods: Launches Offer for Sale to sell up to 7 percent equity. Floor price at Rs 1,000 per share, which is an 18 percent discount to Wednesday's closing price.

Reliance Industries: All existing contracts for July, August and September will expire on July 19. Methodology of settlement to be intimidated by respective clearing corporation. Adjustment as July 20 is record date for issue of RSIL shares.

What Are Global Cues Indicating?

Benchmark indices on Wall Street ended higher overnight with the S&P 500 and the Nasdaq lodging their highest single-day close since April 2022. The Dow Jones also gained nearly 100 points.

Stocks rose on Wednesday after a cooler-than-expected June CPI report eased worries of the US Federal Reserve raising rates multiple times to bring down inflation.

Foreign investors were net sellers in the cash market in today's trading session, while domestic investors turned out to be net buyers in the cash market.

Osho Krishnan of Angel One said that nothing significant has changed on the technical structure of the Nifty 50 as the uptrend remains intact. On the downside, he sees support for the index at 19,300, while fresh longs can enter the system only once the Nifty 50 closes above the 19,520 mark.

SAMCO's Ramani also observed the formation of a bearish engulfing pattern, indicating that the bears are stronger than the bulls currently. He expects the Nifty 50 to trade sideways till 19,500 is decisively broken on the upside.

First Published:Jul 12, 2023 11:09 PM IST