Following the prior session’s rally, the Nifty 50 and Sensex turned sharply lower on 7th November 2024, driven by profit booking and selling pressure in heavyweights like ICICI Bank (NS:ICBK), Reliance Industries (NS:RELI), and Trent (NS:TREN). The Nifty 50 ended the session down by 284.70 points, closing at 24,199.35 (-1.16%), while the Sensex dropped 836.34 points to close at 79,541.79 (-1.04%). The downturn reflected a cautious market sentiment amidst global cues and concerns over upcoming economic data releases.
1. Market Recap – Key Movers and Sectoral Performance
The overall market sentiment was bearish, with all sectors closing in the red. Here’s a breakdown of the major contributors to the Nifty’s decline:
- Top Losers:
- ICICI Bank, Reliance Industries, and Trent emerged as top losers, dragging down the broader indices. Heavy profit booking in these stocks contributed significantly to the Nifty’s downward movement.
- Hindalco Industries (NS:HALC) and HDFC Bank (NS:HDBK) were also among the major contributors to the decline, adding pressure on the Nifty’s performance.
- Sectoral Performance:
- Nifty Metal was the worst-performing sector, reflecting broader concerns around global commodity prices.
- Nifty Financial Services and Nifty Bank were also under pressure, with significant sell-offs in ICICI Bank and HDFC Bank.
- Broader indices including the BSE Midcap and Smallcap indices also posted losses, indicating a broad-based market decline.
Overall, the market breadth was negative, with 2,134 stocks declining and 1,823 stocks advancing on the BSE, reflecting pervasive bearish sentiment across the board.
2. FII/DII Activity and Market Sentiment
Institutional flows provided mixed signals, with FIIs continuing to sell while DIIs offered partial support.
- Foreign Institutional Investors (FIIs): FIIs were net sellers in the cash market with an outflow of ₹4,888.77 crore, reflecting a cautious stance amidst global uncertainties.
- Domestic Institutional Investors (DIIs): DIIs attempted to counterbalance FII selling with net purchases of ₹1,786.70 crore in the cash market, though their buying was insufficient to prevent a market decline.
- Derivative Activity: In the derivatives market, FIIs were significant sellers in Index Options, with net sales of ₹26,316.62 crore, while also reducing positions in Stock Futures by ₹7,193.97 crore. This increased activity in options suggests heightened caution and hedging among FIIs.
Implication: Persistent FII selling in the cash market, combined with aggressive positioning in the derivatives market, signals a cautious to bearish outlook in the near term. DIIs’ buying has provided some stability but hasn’t been enough to reverse the negative trend.
3. India VIX and Volatility Analysis
The India VIX rose slightly by 0.5% to close at 14.94, indicating a minor uptick in market volatility. This suggests that traders are factoring in some potential downside risk, though the VIX level remains within a moderate range.
Implication: A stable but slightly rising VIX reflects a cautious market environment, where traders are preparing for potential volatility but without extreme panic. This level of VIX aligns with a market facing near-term resistance and potential downside pressure.
4. Technical Analysis – Daily and 5-Minute Chart Insights
Daily Chart Analysis
The Nifty 50 daily chart shows a reversal from its recent rally, with the index closing near its intraday low. The chart highlights an ongoing struggle to maintain momentum above key levels.
- Fibonacci Support and Resistance:
- Key Fibonacci retracement levels identified are as follows:
- Support: Immediate support at 24,100 (38.2% retracement from recent lows).
- Resistance: Near-term resistance is seen at 24,450 (recent high and psychological barrier), with stronger resistance at 24,600.
- A breakdown below 24,100 may trigger additional selling pressure, with the next support level around 23,750.
- Key Fibonacci retracement levels identified are as follows:
- Moving Averages:
- Nifty remains below its 20-day and 50-day moving averages, which are both trending downward, indicating a bearish medium-term outlook.
- Candlestick Pattern:
- The bearish candlestick pattern on the daily chart reflects increased selling pressure and a lack of buying momentum. The pattern suggests that the market may struggle to find strong support in the immediate term.
Intraday 5-Minute Chart Analysis and Fibonacci Levels
The 5-minute intraday chart showed significant selling throughout the session, with Nifty struggling to break above intraday resistance levels.
- Intraday Fibonacci Levels for 8th November:
- Resistance Levels: 24,300 (intraday high resistance) and 24,450.
- Support Levels: 24,150 and 24,000.
Implication: Persistent selling near resistance levels on the intraday chart indicates that traders may continue to offload positions on any attempted bounce, with stronger support expected around the 24,100–24,000 zone.
5. Option Chain Analysis for 8th November Expiry
The options chain data reveals a bearish bias with significant open interest on the call side, indicating resistance at higher levels.
- Call OI Concentration:
- The highest concentration of Open Interest (OI) on the call side is observed at the 24,500 and 24,600 strikes, suggesting strong resistance near these levels.
- Put OI Concentration:
- Major support levels are visible at the 24,200 and 24,000 strikes, indicating where traders might step in to provide buying support.
- Max Pain Level:
- The Max Pain point remains at 24,200, aligning closely with the current closing level, suggesting potential for sideways to bearish movement around this level in the immediate term.
Implication: The options data suggests strong resistance around 24,500, with support at 24,200 and 24,000. This implies that Nifty may remain range-bound, with a bearish bias unless it can decisively break above resistance.
Market Outlook for 8th November 2024
The market outlook for Nifty 50 on November 8 appears cautiously bearish given the technical and derivative signals, with important levels to watch:
- Bearish Bias: Given the strong selling pressure, especially in heavyweight stocks, the outlook for the next session leans bearish. The index could face stiff resistance at 24,300 and 24,450 if it attempts to recover.
- Key Levels to Watch:
- Upside Resistance: 24,300 (intraday resistance) and 24,450–24,500.
- Downside Support: Immediate support at 24,150, with stronger support at around 24,000.
Trading Strategy for 8th November:
- For Short Positions: Consider short positions on any pullbacks near 24,300 or 24,450, with a target of 24,100 and stop-loss at 24,500.
- For Long Positions: Aggressive long positions could be considered near 24,000 with a tight stop-loss, targeting a minor rebound towards 24,300.
Conclusion: With FIIs continuing to be net sellers and the technical indicators suggesting a bearish bias, the Nifty could remain under pressure in the short term. The index may see a volatile session with a bearish tilt, especially if it fails to hold above key support levels around 24,100 and 24,000.