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Trade Setup for January 18: Nifty's Weekly Expiry Outlook

In this article, we will provide a trade setup and outlook for Nifty's weekly expiry on January 18th. Stay updated with the latest financial information and make informed trading decisions.

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By TheFrames Team
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The Nifty index has experienced a significant drop in its value, wiping off a substantial amount of market capitalization due to disappointing earnings from HDFC Bank. This single event resulted in the biggest single-day drop in two years for the index. As a consequence, the Nifty closed below its 20-Day Moving Average for the first time since October last year, indicating a potential correction in the market.

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Market Overview

The market sell-off on Wednesday led to the erosion of ₹4 lakh crore of investor wealth. Rising geopolitical tensions and a stronger dollar are additional factors contributing to the potential headwinds in the market. Furthermore, the Nifty's sentiment is expected to remain weak until it remains below the 21,650 mark, with a possible fall towards 21,465 - 21,400 on the downside. On the other hand, a move above 21,650 can take the market back towards 21,750.

Nifty Bank's Performance

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The Nifty Bank, which showed promise of reaching 50,000, experienced a significant setback with the decline of HDFC Bank's stocks. The index is now precariously close to breaking below the 46,000 mark. The sentiment on the near-term is likely to remain weak, with immediate support seen at 45,930 - 45,900. A drop below these levels may extend the correction on the index further towards 45,500. On the upside, immediate resistance is now at 46,350.

F&O Cues

Analyzing the January futures, Nifty 50's contracts have shed 8.5% and 10.43 lakh shares in Open Interest, and are now trading at a premium of 17.6 points. Nifty Bank's January futures, on the other hand, added 19.7% or 3.98 lakh shares in Open Interest. The Put-Call Ratio for Nifty 50 is now at 0.7 from 1.21 earlier.

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Stocks to Watch

Several stocks have shown interesting movement in terms of Open Interest and price changes. HDFC Bank, Kotak Mahindra Bank, Asian Paints, IndusInd Bank, and IDFC First Bank are among the stocks that added fresh short positions on Wednesday. Conversely, L&T Technology Services, Chambal Fertilisers, Metropolis Healthcare, Polycab, and Indian Oil saw short covering, indicating an increase in price but a decline in Open Interest. Unwinding of long positions was seen in stocks like BPCL, ICICI Bank, Aarti Industries, Aditya Birla Capital, and Granules India.

Important Announcements

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Several companies have made significant announcements that may impact their stock performance. L&T, Mindtree, ICICI Prudential, NHPC, Jindal Saw, Nazara Technologies, Zydus Lifesciences, Indiabulls Housing Finance, Pricol, and IIFL Finance have released important updates regarding their financials, future plans, and stakeholder activities.

L&T

L&T reported a US Dollar revenue of ₹1,083.7 million, in line with expectations. Their Rupee revenue and net profit also met expectations, but the EBIT margin was slightly lower.

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Mindtree

Mindtree's US Dollar revenue and net profit were in line with expectations, while the EBIT margin was lower than anticipated.

ICICI Prudential

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ICICI Prudential's December quarter Annual Premium Equivalent (APE) was below expectations, with a lower value of new business and VNB margin compared to estimates.

NHPC

The government plans to divest a 3.5% stake in NHPC via Offer for Sale, including a green shoe option of 1%. The stock has experienced significant growth over the past year.

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Jindal Saw

Jindal Saw reported a 10% increase in revenue and a doubling of EBITDA. Their order book for iron & steel pipes and pellets remains strong, with a significant portion coming from global markets.

Nazara Technologies

Nazara Technologies has approved a preferential allotment of equity shares to raise up to ₹250 crore. Several investors will increase their stake in the company, contributing to its funding needs and growth objectives.

Zydus Lifesciences

Zydus Lifesciences has received final approval from the USFDA for Pimavanserin capsules and tablets. These medications are used in the treatment of hallucinations and delusions associated with Parkinson's disease Psychosis.

Indiabulls Housing Finance

Indiabulls Housing Finance has approved raising funds of up to ₹5,000 crore via the issue of equity shares through various methods.

Pricol

Minda Corp has exited Pricol by selling its stake, while other investors and funds continue to hold shares in the company.

IIFL Finance

IIFL Finance reported a 17.7% increase in revenue compared to the previous year, but a decline in net profit.

Conclusion

The Nifty index and Nifty Bank have experienced significant drops, erasing market capitalization and causing a correction in the market. The F&O cues indicate a shift in Open Interest and price changes for various stocks, presenting potential trading opportunities. Additionally, important announcements from companies like L&T, Mindtree, and ICICI Prudential may influence their stock performance. Traders and investors should closely monitor these developments to make informed decisions.

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