Bulls on knees as report of tighter curbs surfaces in Maharashtra

Update: Indian markets cracked sharply during the last half an hour of the trading session with Nifty and Sensex plunging 0.80 per cent. 

The fall could be attributed to the reports surfacing that Maharashtra Government may tighten curbs along with limiting timings of grocery shops from 7 to 11 am.   

Majority of the sectoral indices were trading in red with Nifty IT leading the fall while only three sectors traded in green with Nifty Media and Nifty Pharma being the top gainers.   

Indian markets have erased bulked of their early gains and were seen hovering around the neutral line. 

Bajaj twins along with pharmaceutical stocks have helped the index to stay afloat in positive terrain. Bajaj twins have combinedly contributed nearly 13 points while Dr Reddy’s and Sun Pharma contributed nearly 6 points and 4 points, respectively. Among the sectoral indices, Nifty Media and Nifty Pharma were the top gainers.  

Global cues: Cues from the European stock markets were lacklustre. Meanwhile, Dow Futures were also seen trading flat; however, it was off day’s high.    

Indian benchmark indices have trimmed their early gains and are trading near the low point of the day on Tuesday. Traders preferred to book profits at higher levels while Nifty 14,500 Call option has added over 20 lakh shares in the open interest in today’s session itself, which clearly reflects that writers are aggressively writing the 14,500 Call option. 

Moreover, maximum open interest concentration on the Call side also stands at 14,500 Call option. Hence, the level of 14,500 is likely to act as a barrier for Nifty in the near term. On the other hand, unwinding has been witnessed in the 14,400 Call option. On the Put option side, 14,400 Put option has seen the addition of more than 15 lakh shares in the open interest, which takes the total concentration of open interest in this strike to 27 lakh shares.   

 Among the sectoral indices, barring Nifty IT, all other indices were trading in green with Nifty Media and Nifty PSU Bank being the top gainers. 

After Monday's massive fall, a ray of hope seems to appear in the bull camp as the Indian government has played a trump card by announcing that everyone above 18 years is eligible for a vaccination against COVID-19 from May 1. 

Nifty was trading higher by 100 points, above the 14,450 mark while Sensex was up by 320 points above the 48,250 mark. Around 43 stocks out of 50 stocks of Nifty 50 traded in the green.   

The broader markets were seen outperforming the frontline indices with Nifty Midcap 100 and Nifty Smallcap 100 inching higher by 1.53 per cent and 1.68 per cent, respectively. As a result, the advance-decline ratio is in favour of bulls as the number of stock advances outpaces declining stocks.   

Among stock-specific action, ICICI Prudential surged 9 per cent while open interest changed more than 23 per cent, which is a sign of long build-up. PVR, ACC, SBI Life, and Bajaj Finserv were some other stocks that have seen a long build-up.   

There is something common between the IPL defending champion, Mumbai Indians and Nifty as both are known for their bad start. Yes, you heard it right! Mumbai Indians started their campaign with a loss in IPL 2021 while Nifty has a habit of commencing the week on a negative note. In the current month, Nifty has begun the first trading session of the each week in the red, and Monday i.e., April 19, 2021, was no different.   

Nifty opened the session with a huge gap down amid the highest COVID cases in the country, which has led to increasing restriction announcements from the state governments. And as the day progressed, selling pressure exaggerated, and at one point in time, Nifty slipped below the 14,200 level to mark the day’s low of 14,191. However, the index witnessed a smart recovery from the lower levels, and in the end, Nifty reclaimed its 14,300 mark as well as 100-DMA.   

The price action of the day has formed a small body bullish candle as its closing was greater than the opening and in technical parlance, it resembles a hammer candlestick pattern. Formation of this pattern near about the lower end of the range could mean a possibility of upside bounce in the coming session. Having said that, we also need to observe in the larger context that the index has been forming a lower high and a lower low as Nifty registered a new low of 14,191 on Monday. However, one may expect a small pullback in the next couple of sessions due to the oversold nature of index in the shorter timeframe along with the formation of a hammer-like pattern on the daily chart. On the way up, the gap area of April 19 (14,559-14,382) could act as a strong resistance point.   

On the downside, immediate support is placed around the 100-DMA, which is placed at 14,332, and as long as the index stays above this level, hopes for a pullback rally would stay alive.   

Overall, we would not recommend aggressive short positions at the current levels as it would be wise to wait for a pullback around 14,450-14,550 levels to create a short position as creating short positions around these levels would offer a good risk-reward.