Trade Setup: Following yesterday’s sharp correction, the market is likely to start muted, as broader stocks tumble

The market was shaken as the Nifty dropped 500 points from its peak for the day. Experienced investors, however, were unfazed by the recent surge of over 3,000 points in less than two months. Despite the absence of a clear catalyst, Thursday’s downturn demonstrated the market’s innate volatility and resilience.

Although the Nifty decline received media attention, the wider markets suffered more, which makes sense considering their outstanding year-end performance. A typical 6-7% decline was seen in stocks with spectacular increases of 2x and 3x, such as IREDA and IRFC, which were ascribed to profit booking. The dangers connected to this year’s top achievers were highlighted by this adjustment.

Trade Setup: Following a sharp correction, the market is likely to start muted. Concerns were expressed by market observers yesterday as foreign investors continued to have a net selling position in the cash market. Even with strong domestic numbers, it is impossible to overlook the significance of six significant block transactions totaling close to Rs 10,000 crore on Wednesday, which may have an influence on the dynamics of the market as a whole. Thursday’s trading activity was further complicated by the Nifty 50 weekly contracts’ last options expiration for 2023.

Mixed indications were seen in the F&O data, with 7.4 lakh shares in Open Interest and a 5.8% decline in Nifty 50’s December futures. The Put-Call Ratio for the Nifty 50 decreased from 1.13 to 0.66, indicating a rise in uncertainty. Some stocks, including IRCTC and Zee Entertainment, left the F&O ban list, while others, like Ashok Leyland and India Cements, joined it. Notably, a number of equities were still prohibited, including those of Manappuram Finance, SAIL, Balrampur Chini, NALCO, Indus Towers, Delta Corp, Piramal Enterprises, and RBL Bank.

Options with an expiration date of December 21 showed higher Open Interest in Nifty 50 call strikes with a maximum addition of 21,300, ranging from 21,200 to 21,600. Significant Open Interest shedding occurred on the put side for Nifty 50’s put strikes between 21,200 and 21,400 as a result of Wednesday’s decline.

A number of noteworthy events in different industries are expected to have an impact on Thursday’s trading day. AstraZeneca Pharma India is preparing to introduce Enhertu, a medication that is essential for treating metastatic or incurable HER2-positive breast cancer, in January 2024.

The Ministry of Defence has awarded a Rs 1,614.89 crore contract to Mazagon Dock Shipbuilders for the construction of six next-generation offshore patrol boats for the Indian Coast Guard. A contract of Rs 488.25 crore was signed by Cochin Shipyard to undertake a brief refurbishment of an Indian Navy vessel.

Within the media industry, Zee Entertainment was notified by CMEPL and BEPL that they want to initiate good-faith discussions in compliance with the terms of the merger cooperation agreement.

The closing dates for Samvardhana Motherson’s announcement of extending the purchase of a 73.05% share in Irillic Pvt Ltd to the end of February 2024 have been extended. Blackstone sold the remaining 23.5% of the Embassy REIT to notable bidders, including SBI MF, Fidelity, HDFC MF, and Smallcap World Fund.

After selling 1.78 crore shares, IndusInd Bank withdrew from Nippon India AMC; bidders in the block trade included SBI MF and ICICI Prudential.

Significant post-listing acquisitions in India Shelter Finance were made by Goldman Sachs and BofA Securities, while a block transaction saw Abakkus Asset Management, under the leadership of Sunil Singhania, acquiring a share in Shriram Pistons.

The RBI gave ICICI Bank permission to nominate Sandeep Batra as Executive Director, while the BSE authorized the nomination of Pramod Agrawal as Chairman. The European Union’s Technical Equivalency (TEQ) accreditation of India Pesticides’ Herbicide Technical Product was a significant accomplishment.

The dynamics of the market are further complicated by the worldwide situation. Asia-Pacific benchmark indexes fell 1.3%, 1.2%, and 0.4%, respectively, mirroring the losses on Wall Street. The Nikkei 225 fell 1.3%, the Topix fell 1.2%, and the Kospi in South Korea fell 0.4%. The Hang Seng futures point to a shaky start to the trading day as well.

The Dow Jones finished 1.3% down, while the S&P 500 and Nasdaq on Wall Street had their biggest one-day declines since September 26. They each fell 1.5%.

GIFT When compared to Nifty Futures’ Wednesday finish, Nifty is trading down more than 30 points, suggesting that the Indian market may see some first small drops.

Investors are recommended to carefully follow developments in major industries and global signals as the market struggles with this wild ride. Given the present volatility, they should exercise prudence and make prudent decisions.