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: Increasing tariffs for pre-paid and post-paid customers from July 4, 2024. Tariffs will rise by 10% to 21%. The company plans to invest in enhancing 4G services and launching 5G 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 the 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. The company also 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 as “Sigrima,” while DRL will market it as “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: Promoter pledged 4.5 lakh shares for refinancing.

Bank of Baroda: To consider a capital-raising plan for FY2025 on July 5, via Additional Tier-1 and Tier-2 debt capital instruments.

UltraTech Cement: Commissioned an additional 3.35 MTPA Clinker and 1.8 MTPA grinding capacity at its Tadipatri unit in 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 $565 million worth of debt instruments in T Steel Holdings into equity shares in FY2025. Post-conversion, T Steel Holdings will remain a wholly-owned subsidiary.

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

Navin Fluorine: Board approved a fund raise 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, questions arise about whether the Nifty has peaked for now.

Banks and heavyweights like Reliance Industries led the market higher in June, but banks are showing signs of exhaustion. The banking index did not participate in the Nifty’s upmove on Thursday and led the index lower on Friday. With the index moving 7,000 points since June 4, there is speculation about whether the Nifty Bank will trigger a correction.

Historically, July has been a good month for the Nifty, with gains of 4% to 7% in three of the last four years. However, this series has multiple triggers, including global cues, earnings season, business updates, the Union Budget, and monsoon progress.

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 suggests a possible pullback or consolidation. Support levels are at 23,800 and 23,600, with resistance at 24,200 and 24,600.

Rajesh Bhosale of Angel One advises taking some profits at higher levels, with immediate resistance at 24,200 - 24,250 and support at 23,850 and 23,650. Nagaraj Shetti of HDFC Securities also sees hurdles between 24,000 and 24,100, advising a buy-on-dips approach.

The Nifty Bank has gained for seven weeks in a row but showed signs of exhaustion on Friday, falling nearly 500 points. Immediate support is at 52,000, with resistance at 52,700 - 53,000. Kunal Shah of LKP Securities and Om Mehra of SAMCO Securities suggest a “sell-on-rise” strategy until the index moves decisively above 53,000.

Hrishikesh Yedve of Asit C Mehta Investment Intermediates believes the Nifty Bank has formed a bearish candle, with 53,200 as a hurdle. Sustaining above this level could lead to a rally towards 54,000.

Nifty 50’s July futures added 1.7% in Open Interest on Friday, trading at a premium of 121.65 points. Nifty Bank’s July futures added 0.8% in Open Interest. The Put-Call Ratio for Nifty 50 is at 1.2. India Cements and Indus Towers are in 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, while Put strikes between 23,500 and 24,150 have also seen Open Interest addition.