Big Gap-up Start to Budget Week - Pre-Market Analysis Report


What Happened Yesterday?

NIFTY started Thursday flat at 21,456  and started to fall. It took support at the 21,250 level two times throughout the day. But there was strength towards the end, and the market went up 150 points in the last 30 minutes. NIFTY closed the day at 21,352, down by 101 points or 0.47%.

U.S. markets closed mixed. The European markets closed in the green.

What to Expect Today?

Asian markets are trading in the green.

The U.S. Futures are trading in slight red.

GIFT NIFTY is trading in green at 21,640.

All the factors combined indicate a gap-up opening in the market.

NIFTY has supports at 21,400, 21,340 and 21,210. We can expect resistances at 21,480, 21,580 and 21,690.

BANKNIFTY has supports at 44,900, 44,600 and 44,280. We can expect resistances at 45,230, 45,470 and 45,635.

There are no good open interest formations in the market, as our market had a 3-day weekend.

Last week, Foreign Institutional Investors net-sold shares worth Rs -12,202 crores. Domestic Institutional Investors net-bought shares worth Rs 9,700 crores.

INDIA VIX fell to 13.86.

Last week was a very short trading week with just 3 trading sessions. And 2 major things happened towards the end of the week. U.S. markets went on to hit another all-time high on Friday, and LIC got approval to acquire an extra stake in HDFC Bank.

The beaten-down Indian market, especially Bank Nifty which is down by 7.7% from ATH, would love both of these news. Especially, the one which would turn sentiments in HDFC Bank.

LIC got approval from RBI to increase its stake in HDFC Bank from 5.2% to 10%. Although it is exactly not sure if and when LIC will buy more shares, the theory is that the sentiment alone could bring retail buying.

We are expecting a good gap-up of 200+ points as indicated by GIFT NIFTY. HDFC Bank ADR is up 4% in the last 2 days. As there are fewer OI buildups after the monthly expiry and long weekend, not expecting short covering to be strong. 

This week will be super important for today’s market, the Fed Interest Rate decision and the budget announcement on Thursday.

On Wednesday night, the U.S. Federal Reserve is expected to announce there will be no interest rate hikes.

And on Thursday, our market is expected to be volatile for the expiry and budget day.

44,600 support in BANKNIFTY was taken religiously by BANKNIFTY last day. Till the last 30-minute rally, it was well respected. Expecting 45,100 to be a similar support for the index after today’s gap-up.

Again for NIFTY, breaking 21,580 on the upper side will indicate that there is still a lot of strength before Thursday’s budget announcement.

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