Trade Setup for April 15: Will Nifty see a further correction as geopolitical tensions escalate?

The Indian market has been such in recent times that every significant dip gets bought into and there is nothing to call a “significant correction” ever since the Covid-19 fall that was witnessed in 2020. The Nifty saw a similar dip last Friday, but that did not get bought into. As a result, instead of looking at 23,000, the index now finds itself at a very crucial support zone.

For the first half of last Friday, the index remained largely resilient to the global sell-off. But once the slide began post noon, it stopped only after the closing bell. The Nifty is now near the 22,500 mark, a level it has not closed below since the start of the April series.

There are multiple factors that threaten a further correction. US markets sold off once again on Friday. The S&P 500 saw its worst day since January. The Dow Jones also fell nearly 500 points. The Fed rate cut uncertainty is back and is rearing its head amidst persistently high inflation in the US. Adding to that is a stronger dollar, rising treasury yields, commodity prices and the geopolitical tensions in the middle east.

Adding to that is the overhang with regards to the India-Mauritius Double Taxation Avoidance Agreement amendments which have raised concerns among investors. The Income Tax department said that the protocol pertaining to the amendment is yet to be ratified and notified under section 90 of the Income-Tax Act, 1961. Until then, any queries regarding this will be addressed as and when deemed necessary.

In a conversation with CNBC-TV18, Ambit Group CEO Ashok Wadhwa said that in case this amendment does happen retrospectively, it will dent investor confidence in the market. You can read more on that here.

What may or may not lend support to the market during Monday’s trading session is TCS, but that is subject to how the street reacts to the results and management commentary. While TCS reported margins that were the highest in 12 quarters, its headcount dipped for the first time annually in 19 years.

The Nifty ended absolutely flat for the week, having given up all the gains post Friday’s sell-off. During Friday’s trading session, the foreign investors were heavy sellers in the cash market, while domestic investors tried to offset the heavy selling pressure.

Shrikant Chouhan of Kotak Securities expects the Nifty to slip towards the 22,300 mark on the downside as long as it keeps trading below the mark of 22,650. Only a sustained move above the 22,650 mark may lead to a change in sentiment.

On a weekly basis, the Nifty has formed a shooting star candlestick pattern, indicating uncertainty prevailing in the market, according to Asit C Mehta Investment Intermediates. It expects the index to trade in a range between 22,000 and 23,000 during the quarterly earnings, with 22,500 acting as a support zone.

Angel One’s Rajesh Bhosale believes that 22,500 – 22,450 is a key support for the Nifty and a breach of those levels may result in further profit booking towards the 22,300 levels and beyond in the near term. 22,700 – 22,800 has now become a significant resistance, he added.

The Nifty Bank also sold off on Friday in-line with the overall market and snapped a six-day winning streak in the process. That index too barely managed to sneak in some gains for the week and is also near a key level of 48,500.

Only a decisive move above the 49,000 mark can resume the bullish sentiment on the Nifty Bank, said Kunal Shah of LKP Securities and only such a move can push the index towards the 50,000 mark. On the downside, immediate support is at 48,000 where there is maximum Open Interest concentration on the Put side.

What Are The F&O Cues Indicating?

These stocks added fresh long positions on Friday, meaning an increase in both price and Open Interest:

These stocks added fresh short positions on Friday, meaning a decline in price but increase in Open Interest:

These stocks saw short covering on Friday, meaning an increase in price but decline in Open Interest:

Unwinding of long positions was seen in these stocks on Friday, meaning a decline in both price and Open Interest:

These are the stocks to watch out for ahead of Monday’s trading session:

• TCS: Constant currency revenue growth of 1.1% misses estimates of 1.3%. However, EBIT margins were at a three year high and deal wins worth $13.2 billion were a record. The company expects growth in the current financial year to be better than the previous year. Attrition fell further to 12.5%. Already visiting colleges to hire fresh graduates.
• Anand Rathi Wealth: Revenue grew by 35% during the quarter to ₹752 crore, while net profit after tax increased by 34% year-on-year. Assets Under Management grew by 52% from last year to ₹59,351 crore. The board has announced a buyback of equity shares through the tender offer route. The company intends to buyback 3.7 lakh equity shares or 0.88% of the total equity at a price of ₹4,450 per share, which is a 9.9% premium to Friday’s closing price. Additionally, the board has also declared an interim dividend of ₹9 per share.
• Aster DM Healthcare: Company declared a special dividend of ₹118 per share post receipt of proceeds from the sale of its GCC business. The special dividend will be paid within 30 days from the day of declaration. Record date for the special dividend has been fixed at April 23.
• Senco Gold: Achieved 28% revenue growth for financial year 2024 and 39% from last year for the March quarter. Despite rising gold prices, the company achieved 13% volume growth in Gold and 19% volume growth in diamond for the full year. The old Gold exchange as a percentage of sales increased to 32% from 29% last year. Same-store-sales-growth during the full year stood at 19%.
• Kolte-Patil Developers: Highest-ever annual sales value of ₹2,822 crore, a growth of 26% from last year. Highest ever annual sales volume of 3.92 million square feet, up 20% year-on-year. Launched projects with Gross Development Value of ₹3,800 crore during the financial year. Collections up 9% for the year at ₹2,070 crore, also the highest ever. Realisations for the March quarter are down 5% to ₹7,226 per square feet from ₹7,579 in the December quarter and are flat compared to last year.
• Shilpa Medicare: Raises ₹500 crore through a QIP. Funds managed by Sunil Singhania, Madhusudan Kela among those issued shares. ICICI Prudential, Bandhan Mutual Fund also issued shares. Issue price of the QIP fixed as ₹455 per share, which is a 4.68% discount to the QIP floor price of ₹477.33 per share.
• STL / Sterlite Technologies: Has raised ₹1,000 crore through its QIP. Issue price has been fixed as ₹113.05 per share, which is a 5% discount to the floor price of ₹119. HDFC MF, Goldman Sachs, Societe Generale, Nippon India among others issued shares in the QIP.
• ISMT: Gets two contracts from ONGC for supply of regular casing pipes worth ₹343.72 crore. The orders need to be executed until February 13, 2025.
• Ami Organics: To raise up to ₹500 crore via QIP and other methods.
• Indian Overseas Bank: Hikes lending rates by 5-10 basis points across tenors from April 15.
• IIFL Finance: CARE Ratings has revised its credit watch on the long-term bank facilities, long term instruments, and NCDs of IIFL Finance and on the NCDs of IIFL Home Finance from “Rating Watch with Developing Implications” to “Rating Watch with Negative Implications.”