Nifty forms bullish candle; 18,100 to be next crucial resistance

The Nifty50 as expected had a strong gap-up opening on October 31 and finally closed above the psychological 18,000 mark for the first time since September 13, driven by a rally in auto, banking & financial services, technology, and pharma stocks. The robust beginning of the week was especially after consolidation last week, ahead of a special Reserve Bank of India (RBI) meeting and the Federal Reserve's interest rate decision due later this week.

The index has formed a bullish candle on the daily charts as the closing was higher than the opening levels. Given the optimism, the 50-share NSE benchmark can march towards 18,100 if it strongly holds the 17,900-18,000 area in coming sessions, followed by which the next target would be 18,350, the high of a current calendar year, with crucial support at 17,500-17,800 zone, experts said.

The broader markets had a mixed trend as the breadth was not completely in favor of bulls. About 1,084 shares advanced against 916 declining shares on the NSE. The Nifty Midcap 100 index was up 1.1 percent and Smallcap 100 index ended flat with a positive bias.

The Nifty50 opened gap-up by more than 100 points at 17,910 and hit an intraday high of 18,023. The index closed with 225-point gains at 18,012."The Nifty has formed a bullish candle and higher bottom formation, which is indicating the continuation of an uptrend in the near future," Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities said.

Below 17,900, traders may prefer to exit long positions, the market expert advised. On further decline it could retest the 17,800 mark, he said. India VIX was down by 0.75 percent to 15.80 levels, which also made the bulls comfortable. In the immediate term, the Nifty50 may trade in the range of 17,700 to 18,200 levels as per the Options data.

On the Option front, the maximum Call open interest was seen at 18,500 strikes followed by 18,000 strikes while the maximum Put open interest was seen at 17,000 strikes, followed by 17,500 strikes.

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Wall Street surges to sharply higher close ahead of Fed week

A robust, broad-based rally sent Wall Street to a sharply higher close on Friday as encouraging economic data and a sunnier earnings outlook fueled investor risk appetite ahead of next week's much-anticipated two-day policy meeting of the Federal Reserve.

All major U.S. indexes ended the session up about 2.5% or more, with the S&P and the Nasdaq notching their second straight weekly gains. The blue-chip Dow posted its fourth consecutive Friday-to-Friday advance and its biggest weekly percentage gain since May.

"This has been one of the best months (so far) in the history of the Dow, suggesting the bear market likely ended," said Ryan Detrick, chief market strategist at Carson Group in Omaha. "Big monthly moves historically happen at the end of bear markets."

"This is the second Friday in a row we've seen aggressive buying suggesting investors are growing more comfortable holding over the weekend," Detrick added.A 7.6% rebound in Apple Inc helped soften the blow of the 6.8% plunge for Amazon.com shares, in the wake of the two market leaders' results.

Solid earnings beats from Chevron, Exxon Mobil and other companies outside the tech and tech-adjacent megacap group have brightened aggregate earnings estimates for the quarter.

Analysts now see third-quarter S&P 500 earnings growth of 4.1%, up from 2.5% on Thursday, according to Refinitiv data.

"We've seen some high-profile misses from significant large-cap names," Detrick said. "But under the surface many of the smaller and midsize companies have been quite impressive with their earnings results."

Financial markets have now priced in an 84.5% likelihood of a fifth consecutive 75 basis point interest rate hike at the conclusion of the Fed's Nov. 1-2 policy meeting, and a 51.4% chance the central bank will decelerate to 50 basis points in December, according to CME's FedWatch tool.

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Nifty forms Bearish Belt Hold pattern, consolidation likely to continue before further uptrend

The Nifty50 lost momentum after the initial hour of the rally and remained under pressure throughout the session, forming a bearish candle that resembles a Bearish Belt Hold kind of pattern on the daily charts on October 25. This pattern is generally getting formed in an upward trend.

The index erased half of its Muhurat trading gains. This could just be a profit-taking after the recent rally and hence, as long as the index trades above its previous consolidation zone of 17,400-17,650, the trend is expected to be positive with resistance in the range of 17,900-18,000 levels, and support at 17,500-17,400 zone, experts said.

A 'Bearish Belt Hold' pattern is formed when the opening price becomes the highest point of the trading day (intraday high) and the index declines throughout the day making up the large body. The candle will either have a small or no upper shadow and a small lower shadow.

The broader markets had a mixed trend amid weak breadth. The Nifty Midcap 100 index was up half a percent and Smallcap 100 index declined 0.1 percent. About five shares declined for every three rising shares on the NSE.

The Nifty50 opened strong at 17,808 and hit a high of 17,811, but after an initial hour of the rally, erased all those gains and corrected up to 17,637, an intraday low. The 50-share NSE benchmark closed with 75 points loss at 17,656.

"During the day, the Nifty remained above the previous consolidation high, suggesting a rise in optimism. Over the short term, the trend is expected to remain strong," Rupak De, Senior Technical Analyst at LKP Securities said. On the higher end, resistance is visible at 17,950. On the lower end, support is placed at 17,550-17,400, De added.

India VIX, which measures the expected volatility in the market, was down by 3.11 percent from 17.42 to 16.88 levels. Volatility cooled off from its highs but it needs to now further come down to 15-16 levels for market stability and a smoother ride, experts said.

On the Option front, we have seen maximum Call open interest at 18,000 strike followed by 17,800 strike while maximum Put open interest was seen at 17,500 strike then 17,000 strike.

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Uptrend likely to continue if Nifty holds 17,500

The Nifty50 on October 21 started off on a positive note but weakness in European counterparts weighed on the sentiment in the later part of the session. The index eventually settled flat with a positive bias amid caution ahead of the long weekend, thereby extending the uptrend for the sixth consecutive session.

The index formed a small-bodied bearish candle on the daily charts as the closing was lower than the opening levels. The Nifty50 seems to have taken good support at 17,500-17,400 levels now, hence if it holds the 17,500 mark in coming sessions then the index can easily march towards 17,700-17,900 levels, experts said.

On a weekly basis, the Nifty50 has seen the formation of a decent bullish candlestick pattern, indicating that 17,900 is going to be the next stop for the index. It recouped all its previous week's losses and closed with 2.27 percent gains during the week.

On the broader markets front, however, there was underperformance compared to benchmarks. The Nifty Midcap 100 index was down 0.7 percent and Smallcap 100 index fell 0.14 percent amid weak breadth. About two shares declined for every share rising on the NSE.

The Nifty50 opened higher at 17,623 and hit an intraday high of 17,670, but some profit booking in the later part of the session pulled down the index up to 17,521 intraday. The index finally closed at 17,576, up 12.3 points.

"The Nifty successfully surpassed the 20 and 50 days SMA (simple moving average) resistance mark which is largely positive. It has also formed a long bullish candle on weekly charts that suggest further uptrend from the current levels," Amol Athawale, Deputy Vice President - Technical Research at Kotak Securities said.

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Indian stock market may continue to outperform in Samvat 2079

India's equity market is expected to continue outperforming global peers in the Hindu calendar year of Samvat 2079, aided by strong corporate earnings, analysts said.

Profit is likely to grow over 20 percent in 2023, led by strong credit offtake and a revival in private capital expenditure.

However, money managers expect volatility in returns from the equity market to remain high, given concerns over an impending global recession and geopolitical flashpoints in Europe and Asia.

The benchmark stock indices were resilient in Samvat 2078, with the Sensex and the Nifty losing about 1.89 percent and 2.59 percent, respectively, since last Diwali.

Although these were the first negative returns since 2016, the MSCI Emerging Markets index dropped 31 percent while the MSCI ACWI index lost 25 percent during the same period.

For global equities, Samvat 2078 turned out to be a challenging year, given headwinds including rate hikes, the energy crisis, the Russia-Ukraine conflict, continued supply disruptions, outflows from foreign investors, and heightened inflation.

End of cycle

Morgan Stanley said recently stocks in emerging markets and Asia excluding Japan are close to completing their bear market cycles. Nomura Research said Asian equities, including chipmakers, may bottom in the next few weeks after reviewing indicators on the last 12 US recessions and five chip cycles.

"... over the medium-term (>12 months), we see risk-reward quite attractive on Asian stocks. Assuming China does reopen sometime in early 2023 and stocks attempt to anticipate the end of the US recession (NMR: 4Q23), it is likely that a sustained recovery in Asian stocks may occur sometime in the first half of 2023," Nomura Research said in a report.

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Nifty forms bullish candle, 17,500-17,600 crucial area for further upside

The Nifty50 index is now closer to crucial area of 17,500-17,600 levels. If it manages to surpass this area, then it can gradually march towards 17,800-18,000 levels in coming sessions, with near term support at 17,300 followed by crucial at 17,000, said experts

The Nifty50 had more than 100 points gap up opening and decisively crossed more than couple of earlier swing highs to close with a percent gains, forming small bodied bullish candle on the daily charts on October 18. The 50-share NSE benchmark index extended uptrend for third session in a row, tracking positive mood in global counterparts, but failed to sustain 17,500 mark at close.

The index is now closer to a crucial area of 17,500-17,600 levels. If it manages to surpass this area, then it can gradually march towards 17,800-18,000 levels in coming sessions, with near-term support at 17,300 followed by crucial at 17,000, experts said.

The rally was seen across sectors with Bank, Auto, FMCG, IT, Metal and Oil&Gas indices gaining 1 percent each, while the broader markets were also strong with the Nifty Midcap 100 index rising 1.15 percent and Smallcap 100 index climbing 0.8 percent.

The Nifty50 opened higher at 17,439 and jumped up to 17,528, an intraday high. The index rose 175 points to 17,487, the highest closing level since September 22, taking total three-day gains to around 3 percent.
"In terms of the Fibonacci retracement, 61.8 percent retracement of the entire September decline i.e. 17,580 is expected to keep the current bounce in check," said Gaurav Ratnaparkhi, Head of Technical Research at Sharekhan by BNP Paribas.

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Avenue Supermarts in Indian Share Market Q2 profit rises 64%, revenue 36% on FMCG, staples demand

DMart chain of retail stores operator Avenue Supermarts has reported a 64 percent rise in consolidated post-tax profit of Rs 685 crore for the quarter ended September 2022 as against Rs 418 crore a year back.

Sequentially, the profit is 6.6 percent higher from Rs 642 crore in June quarter this year. Consolidated revenue came in higher at Rs 10,638 crore for the quarter, an increase of 36 percent compared to Rs 7,789 crore in September 2021 quarter. Sequentially, the revenue is higher by 6 percent from Rs 10,038 crore.

EBITDA margin for the quarter stood at 8.4 percent as compared to 8.6 percent in Q2FY22."The FMCG and staples segment of the business has performed better than general merchandise and apparel segments. Discretionary items in the non-FMCG segment while recovering have still not come back to pre-pandemic levels. The inflationary stress is more acute at lower price points in discretionary non-FMCG categories," Neville Noronha, CEO and Managing Director said.

For the first half of FY23, consolidated revenue came in at Rs 20,676 crore, as compared to Rs 12,972 crore a year back. EBITDA margin stood at 9.2 percent as against 6.9 percent in the same period, the company said in an exchange filing.

Food category contributed to 54.75 percent of the revenue, non-foods 20.5 percent, while general merchandise and apparel contributed the rest 24.75 percent.

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HDFC Bank in Indian Share Market Q2 net profit rises 22.3% to Rs 11,125 crore powered by loan growth

 HDFC Bank on October 15 reported a consolidated net profit of Rs 11,125 crore for the quarter ended September 30 (Q2FY23). The figure was 22.3 percent higher than the profit logged in the corresponding quarter of the previous fiscal. This comes on the back of a strong 23 percent loan growth and pristine asset quality.

The bank's standalone net profit increased by 20 percent year-on-year (YoY) to Rs 10,606 crore while its net interest income (NII) grew 18.9 percent to Rs 21,021.2 crore against Rs 17,684.4 crore logged in Q2FY22.

Domestic retail loans grew by 21.4 percent while commercial and rural banking loans saw a growth of 31.3 percent. That apart, corporate and other wholesale loans witnessed an increase of 2 percent.Asset quality of the bank also improved with gross non-performing assets (GNPAs) coming in at 1.23 percent, as against 1.28 percent in the year-ago period. Net non-performing assets (NNPAs) were at 0.33 percent of net advances as on September 30, 2022, as against 0.35 percent in Q1FY23.

Operating expenses for the quarter stood at Rs 11,224.6 crore, up 21 percent YoY. The cost-to-income ratio for Q2FY23 stood at 39.2 percent. Provisions and contingencies declined to Rs 3,240.1 crore as against Rs 3,924.7 crore in the corresponding quarter last fiscal. Meanwhile, the core net interest margin (NIM) came in at 4.1 percent on total assets.

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