Trade Setup for July 1: Will Banks Lead the Next Downturn for the Nifty?

NSE

What Are The F&O Cues Indicating?

• Strike OI Change Premium

  • 25,000: 43.2 Lakh Added, Premium 2.3
  • 24,500: 29.3 Lakh Added, Premium 21.1
  • 24,300: 18.7 Lakh Added, Premium 56.5
  • 24,200: 15.3 Lakh Added, Premium 89.5

• Strike OI Change Premium

  • 23,500: 15.4 Lakh Added, Premium 19.45
  • 24,100: 11 Lakh Added, Premium 159.95
  • 24,150: 6.5 Lakh Added, Premium 187.5
  • 23,900: 5.6 Lakh Added, Premium 82.6

Stock Price Change OI Change

• GNFC: Price up 5.38%, OI up 79.75%
• India Cements: Price up 2.22%, OI up 60.95%
• PNB: Price up 2.77%, OI up 28.40%
• SAIL: Price up 4.05%, OI up 23.77%
• Chambal Fertilisers: Price up 1.51%, OI up 17.71%

Stock Price Change OI Change

• Polycab: Price down 3.73%, OI up 85.53%
• JK Cement: Price down 2.23%, OI up 13.25%
• Coforge: Price down 1.54%, OI up 12.75%
• City Union Bank: Price down 0.15%, OI up 11.61%
• Crompton: Price down 2.98%, OI up 9.04%

Stock Price Change OI Change

• Tata Motors: Price up 1.78%, OI down 7.38%
• Grasim: Price up 1.16%, OI down 5.53%
• Reliance Industries: Price up 2.55%, OI down 5.33%
• IndiaMART: Price up 1.72%, OI down 4.79%
• IPCA Labs: Price up 3.36%, OI down 3.71%

Auto Stocks: To report sales figures for June.

Vodafone Idea: Tariffs for pre-paid and post-paid customers will increase by 10% to 21% starting July 4, 2024. The company plans to use the additional revenue to enhance 4G services and launch 5G services in the coming quarters.

Cochin Shipyard: Udupi Cochin Shipyard Ltd., a subsidiary, has signed a contract with Wilson ASA, Norway, to design and build four 6,300 TDW Dry Cargo Vessels. An agreement for four more vessels will be finalized by September 19. The total cost for all eight vessels is ₹1,100 crore, with completion expected by September 2028.

Godrej Properties: Acquired leasehold rights for an 11-acre land parcel in Pune, with a revenue potential of ₹1,800 crore. The development will include group housing and high street retail. Additionally, the company acquired nearly 7 acres of land in Bengaluru, with an estimated revenue potential of ₹1,200 crore.

Zydus Life: Announced a licensing agreement with Dr. Reddy’s Laboratories to co-market Pertzumab Biosimilar, a treatment for breast cancer, in India. Zydus will market it under the brand name “Sigrima,” while DRL will use the name “Womab.” Zydus will receive upfront licensing income and milestone payments.

IREDA: Loan sanctions increased fivefold year-on-year in the June quarter to ₹9,136 crore. Loan disbursements grew by 67.6% to ₹5,320 crore. The loan book stood at ₹63,150 crore, up 33.77%.

Orchid Pharma: Partnered with Cipla to launch the antibiotic Cefepime-Enmetazobactam in India. The drug is approved for treating complicated urinary tract infections, hospital-acquired pneumonia, and ventilator-associated pneumonia. The partnership aims for widespread distribution across India.

JSW Energy: Its arm, JSW Neo Energy, received a Letter of Award (LoA) for 300 MW wind-solar hybrid capacity from SJVN.

TVS Motor: Invested ₹282.67 crore in TVS Credit Services by subscribing to 68.94 lakh equity shares, increasing its shareholding from 80.53% to 80.69%.

Ajanta Pharma: The promoter has pledged 4.5 lakh shares of the company for refinancing.

Bank of Baroda: To consider a capital-raising plan for the financial year 2025 on July 5. The plan includes raising funds via Additional Tier-1 and Tier-2 debt capital instruments with an interchangeability option.

UltraTech Cement: Commissioned an additional 3.35 MTPA Clinker and 1.8 MTPA grinding capacity at its existing unit in Tadipatri, Andhra Pradesh.

GAIL: Advanced its net-zero target for Scope-1 and Scope-2 GHG emissions to 2035 from 2040.

Tata Steel: Plans to convert debt instruments worth $565 million in T Steel Holdings into equity shares in the financial year 2025. Post-conversion, T Steel Holdings will remain a wholly-owned subsidiary.

Neogen Chemicals: The promoter divested nearly 5.7% ownership in the company via block deals. SBI Mutual Fund and White Oak Group were the buyers.

Navin Fluorine: The board approved a fundraise of ₹750 crore via QIP and other modes.

Market Overview:

The Indian cricket team brought joy to 140 crore Indians by winning the ICC World T20 for the first time in 17 years. Similarly, the Nifty index has shown a strong performance, bouncing back from below 22,000 on June 4 to end the series above 24,000. However, the question now is whether the Nifty has peaked for the time being.

For most of June, banks and heavyweights like Reliance Industries led the market higher. However, banks are now showing signs of exhaustion at higher levels. The banking index did not participate in the Nifty’s upmove on Thursday and led the index lower on Friday, despite support from other constituents like Reliance. With the index having moved 7,000 points from the lows of June 4, the question is whether the Nifty Bank will trigger a correction in the Nifty.

Historically, July has been a good month for the Nifty, with gains ranging between 4% and 7% in three out of the last four years. However, this series comes with multiple triggers, including global cues and domestic factors. Earnings season begins in the second week of July, and companies will start announcing their business updates for the quarter. The Union Budget and the progress of the monsoon will also be key factors.

Foreign investors were small sellers on Friday, while domestic institutions were heavy buyers. Technically, the uptrend remains intact, but the RSI on the hourly chart indicates a possible pullback or consolidation within the uptrend. In case of a pullback, 23,800 or 23,600 will act as supports for the Nifty, with positional support at 23,400. On the upside, 24,200 and 24,600 will be barriers. A buy-on-dips approach is advised.

Rajesh Bhosale of Angel One suggests that while shorting the market is not advised, taking some profits at higher levels is prudent. Immediate resistance for the Nifty is at 24,200 - 24,250, while key support levels are at 23,850 and 23,650.

Nagaraj Shetti of HDFC Securities also sees the Nifty facing hurdles between 24,000 and 24,100, even as the near-term uptrend remains intact. He advises using a pullback as a buying opportunity, with immediate support at 23,800.

The Nifty Bank has gained for seven weeks in a row, but signs of exhaustion are beginning to show. The index fell nearly 500 points on Friday and struggled to close above 53,000. Kunal Shah of LKP Securities termed Friday’s move as the first meaningful correction after a non-stop rally. Immediate support is at 52,000, while 52,700 - 53,000 is a barrier.

Om Mehra of SAMCO Securities noted that the Nifty Bank chart displays a bearish evening star pattern, with resistance near 52,900 - 53,050 and support at 51,700. He advises a “sell-on-rise” strategy until the index decisively moves above 53,000.

Hrishikesh Yedve of Asit C Mehta Investment Intermediates believes that the Nifty Bank has formed a bearish candle near the trendline resistance, with 53,200 acting as a hurdle. Only sustaining above 53,200 can lead to a rally towards 54,000.

Nifty 50’s July futures added 1.7% or 2.3 lakh shares in Open Interest on Friday, trading at a premium of 121.65 points. Nifty Bank’s July futures added 0.8% or 19,350 shares in Open Interest. Nifty 50’s Put-Call Ratio is at 1.2 from 1.49 earlier. India Cements and Indus Towers have entered the F&O ban.

For this Thursday’s weekly options expiry, Nifty 50 Call strikes between 24,200 and 25,000 have seen Open Interest addition. On the Put side, Nifty 50 strikes between 23,500 and 24,150 have seen Open Interest addition.