The Nifty 50 has yet again entered consolidation mode after a breathtaking rally since the second half of May. The index traded in an even narrower band of 60 points on Monday but managed to end above the flat line. It also managed a close above the 18,600 mark. Another positive? It did not slip below 18,550 on an intraday basis.

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It has been over a month since the Nifty 50 index had a move in excess of a percent. The last time it did so was back on May 8. It came close on May 26, but ended 0.97 percent higher.

Only two Nifty 50 constituents - NTPC and IndusInd Bank ended at a 52-week high on Monday. The index may also take some cues from the May CPI fineprint, which fell to 4.25 percent in May from 4.7 percent in April.

"The indecisiveness is quite evident as the Nifty 50 index formed a small 'Doji" candlestick on the daily chart," said Osho Krishnan of Angel One. Only a close above 18,700 - 18,750, will confirm the strength of the index. On the downside, Krishnan believes that levels of 18,450 - 18,400 will act as a strong support. "Traders need to focus on the stock-specific approach to gauge trading opportunities," he said.

The Nifty Bank is in consolidation mode as well but that index is grinding lower, unlike the Nifty 50, which is still seeing modest gains. The banking index fell another 55 points on Monday, registering its third straight day of declines. With this, the index continues to remain below the mark of 44,000, a key support level and is moving towards its next support zone of 43,700.

Kunal Shah of LKP Securities believes that the market is uncertain and cautious as it awaits the release of the US CPI data and the outcome of the FOMC meeting later in the week. "There is a fight between the bulls and the bears at the 44,000 strike as evident from the heavy Open Interest in both call and put strikes," he said. This indicates that market participants have conflicting views about the future direction of the index.

The Nifty Bank index has given a trendline breakdown and closed below the key 44,000 level on the daily chart, said SAMCO Securities' Ashwin Ramani. The next support for the index is 43,700 and in case the selling intensifies, the index can even test levels of 43,400 on the downside.

Action lies within the broader market space even as the Nifty 50 and the banking index are consolidating in a range. The Nifty Midcap index ended with gains of 0.5 percent on Tuesday after a two-day drop. That two-day drop was preceeded by 13 straight days of gains, during which the index made a record high. Eight stocks within the index ended at a 52-week high on Monday.

Laurence Balanco of CLSA has seen a price action breakout in the midcap index after 18 months of price movement. He expects another 13 percent upside to the Midcap index, which may take the index to levels of 39,000. He expects the current midcap outperformance to go on for a few more quarters and that midcap auto names, can end up outperforming its largecap counterparts.

What Are The F&O Cues Indicating?

Nifty 50's June futures shed 6 percent or 5.81 lakh shares in Open Interest on Monday. The futures are now trading at a premium of 81.5 points, compared to 68.15 points earlier. On the other hand, the Nifty Bank futures added 3.4 percent, or 79,975 shares in Open Interest. Nifty 50's put-call ratio is now at 0.92 from 0.83 on Friday.

India Cements, IEX and Indiabulls Housing Finance continue to remain in the F&O ban list, while Delta Corp will also be part of the F&O ban list starting today's session.

Nifty 50 on the Call side for June 15 expiry:

For Thursday's expiry, there has been Open Interest shedding seen in multiple out of the money strikes of the Nifty 50 index. The 18,700 and 18,650 strikes have seen shedding, as has the 19,600 strike, which is still 1,000 points away.

Nifty 50 on the Put side for June 15 expiry:

Put strikes between 18,500 and 18,600 have seen addition in Open Interest on Monday, indicating that the bulls may want to fight to defend those levels in the upcoming sessions. This data is for Thursday's weekly expiry.

Let us take a look at the stocks that added fresh long positions on Monday, which means an increase in price as well as Open Interest:

Let us now take a look at the stocks which added fresh short positions on Monday, which is a decrease in price but an increase in Open Interest:

Here are some stocks which saw short covering on Monday, which means an increase in price but a decline in Open Interest:

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

Honeywell Automation: Parent company Honeywell's new CEO Vimal Kapur told CNBC-TV18 that India's big push for infrastructure bodes well for the company. You can read the entire story and related coverage here.

SJVN: Subsidiary SJVN Green Energy gets 200 MW wind power project through EPC contract. Cost of construction of the project is approximately Rs 1,400 crore.

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Inox Wind, Inox Wind Energy: Board of Inox Wind approves merger of Inox Wind Energy into itself. 158 shares of Inox Wind will be issued for every 10 shares of IWEL.

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What Are Global Cues Indicating?

US equities on Wall Street had another positive session on Monday in anticipation that the US Federal Reserve will skip a rate hike in its latest policy meeting starting tonight.

The S&P 500 and the Nasdaq rose 0.9 percent and 1.5 percent respectively on Monday, thereby closing at their highest level in 13 months. The Dow Jones also added close to 200 points on Monday.

Singapore (SGX) Nifty futures, which are an early indicator of how the Indian equities are likely to start trading are currently trading little changed at 18,719, thereby pointing towards a flat start to the trading session.

Foreign investors were net sellers on Monday, while domestic investors were net buyers in the cash market. However, one must keep in mind that the numbers will be influenced by the Go Fashion block deal which took place on Monday.

The overall chart pattern of the Nifty 50 indicates a bounce from lower levels in the coming sessions, said Nagaraj Shetti of HDFC Securities. While immediate downside support is at 18,500, resistance on the upside is seen at 18,800.

Rupak De of LKP Securities sees 18,600 as an immediate support for the Nifty 50 where signficant put writing is seen. However, 18,650 and 18,800 can act as potential barriers for the Nifty 50's upside.

First Published:Jun 13, 2023 4:36 AM IST