Trade setup for Wednesday: Things to know before opening bell

The market witnessed a sharp correction following a gap-up opening and ended a two-day winning streak on October 31. The Nifty50 faced selling pressure at the crucial resistance level of approximately 19,250, and a negative crossover on the hourly charts suggests the potential for further downside to levels between 19,000 and 18,900. However, a decisive breakthrough of the 19,250-19,300 range could pave the way for higher levels of 19,500-19,600, according to experts.

On October 31, the BSE Sensex dropped 238 points to 63,875, while the Nifty50 declined by 61 points to 19,080. The formation of a long bearish candlestick pattern on the daily charts indicates a shift from a bullish to a bearish trend.

Nagaraj Shetti, a technical research analyst at HDFC Securities, noted that the long bear candle suggests the emergence of selling pressure near the critical resistance levels of 19,200-19,300. Therefore, there may be potential for further consolidation or minor weakness at the recent highs.

The Nifty's key support and resistance levels are as follows: support at 19,056, followed by 19,014 and 18,946, while resistance is expected at 19,191, followed by 19,233 and 19,301.

The Bank Nifty also faced selling pressure at higher levels on October 31, ending the session down 193 points at 42,846. The long bearish candlestick pattern formed suggests a possible slide in the Bank Nifty to levels of 42,400 and below, as indicated by Jatin Gedia, a technical research analyst at Sharekhan by BNP Paribas. Support for the Bank Nifty is projected at 42,786, followed by 42,654 and 42,440, with resistance at 43,214, 43,346, and 43,560.

In the weekly options data, the maximum Call open interest (OI) is observed at the 19,200 strike, with 98.29 lakh contracts. This level is considered a key resistance for the Nifty, followed by the 19,500 strike with 89.71 lakh contracts and the 19,300 strike with 75.06 lakh contracts. The maximum Call writing was seen at the 19,200 strike, adding 45.06 lakh contracts, followed by the 19,300 and 19,500 strikes, with 27.27 lakh and 24.3 lakh contracts, respectively. Maximum Call unwinding occurred at the 19,000 strike, shedding 14.49 lakh contracts, followed by the 20,200 and 20,100 strikes, which saw 1.11 lakh and 99,650 contracts being unwound.

On the Put side, the maximum open interest remained at the 19,000 strike, with 78.14 lakh contracts acting as key support for the Nifty. It was followed by the 19,100 strike with 66.93 lakh contracts and the 18,800 strike with 57.85 lakh contracts. Meaningful Put writing was observed at the 19,100 strike, adding 12.44 lakh contracts, followed by the 18,900 and 18,500 strikes, with 7.73 lakh and 4.85 lakh contracts, respectively. Put unwinding occurred at the 19,000 strike, shedding 17.43 lakh contracts, followed by the 18,300 and 18,000 strikes, which saw 7.63 lakh and 7.05 lakh contracts being unwound.

Stocks with high delivery percentage, including Power Grid Corporation of India, Cummins India, ITC, Hindustan Unilever, and Bharti Airtel, suggest strong investor interest in these stocks.

Long build-up was observed in 55 stocks, including MCX India, GNFC, Coromandel International, Persistent Systems, and Alkem Laboratories, indicating a rise in open interest (OI) and price, signaling long positions being built.

On the other hand, 33 stocks saw long unwinding based on OI percentage. This list includes ONGC, InterGlobe Aviation, Coal India, MRF, and Axis Bank. Long unwinding occurs when both OI and price decline.

Short build-up was noticed in 48 stocks, such as Siemens, Petronet LNG, TVS Motor Company, LTI Mindtree, and Eicher Motors. This signifies an increase in OI coupled with a decrease in price, indicating short positions being built.

Additionally, 51 stocks experienced short-covering, including Dr Lal PathLabs, Cipla, Kotak Mahindra Bank, State Bank of India, and Dalmia Bharat. Short-covering is characterized by a decrease in OI along with a price increase.

In terms of corporate results, Hero MotoCorp, Tata Steel, Sun Pharmaceutical Industries, Britannia Industries, Ambuja Cements, Adani Wilmar, Cera Sanitaryware, Fino Payments Bank, Godrej Consumer Products, Indraprastha Gas, India Cements, JK Tyre & Industries, Kansai Nerolac Paints, KEC International, LIC Housing Finance, Motilal Oswal Financial Services, Plaza Wires, REC, Triveni Turbine, and Unichem Laboratories will announce quarterly earnings on November 1.

Key developments for specific stocks include:

Larsen & Toubro reported a significant year-on-year growth of 45% in consolidated profit for the quarter ended September FY24, with order inflow increasing by 72% YoY to Rs 89,153 crore. Consolidated revenue from operations grew by 19% YoY to Rs 51,024 crore for the quarter.

Bharti Airtel reported a net profit of Rs 1,340.7 crore for the July-September period of FY24, a 16.9% decline from the previous quarter. Revenue from operations decreased by 1% QoQ to Rs 37,044 crore for the quarter.

Tata Consumer Products recorded a 3.1% year-on-year growth in consolidated profit for the quarter ended September FY24, supported by higher other income. Revenue from operations grew by 11% to Rs 3,734 crore compared to the corresponding period in the previous fiscal year.

Lupin received the Establishment Inspection Report (EIR) from the United States Food and Drug Administration (US FDA) for its Mandideep unit-2 manufacturing facility. The EIR was issued following an inspection of the facility conducted from August 7 to August 11, 2023, with the facility receiving an inspection classification of 'no action indicated' (NAI).

Blue Jet Healthcare will make its debut on the BSE and NSE on November 1, with the final issue price set at Rs 346 per share.

State Bank of India's Deputy Managing Director & Chief Risk Officer, Sureddi Srinivasa Rao, will retire from the bank's services, effective from October 31. Rama Mohan Rao Amara will assume the role of Deputy Managing Director & Chief Risk Officer, starting on November 1.

Market data for October 31 shows that foreign institutional investors sold shares worth Rs 696.02 crore, while domestic