Pre-Market Insights Friday: Top factors before the opening bell

The BSE Sensex bore the brunt of this sentiment, plummeting by 571 points to reach 66,230. This decline came on the heels of hawkish remarks by the Federal Reserve Chair. Simultaneously, the Nifty50 saw a drop of 159 points, settling at 19,742, and forming a bearish candlestick pattern on the daily charts. The Relative Strength Index (RSI), a momentum indicator, remained in negative territory.

Rupak De, Senior Technical Analyst at LKP Securities, noted that the Nifty index concluded below the 20-day Exponential Moving Average (EMA) at 19,780, signaling dwindling bullish sentiment. De also pointed out a bearish crossover in the RSI, indicating weakness. He suggests that the preferred strategy remains "selling on rallies" as long as the index stays below the 20,000 mark. On the downside, support is expected in the range of 19,700-19,630.

The broader markets followed suit in the correction, with the Nifty Midcap 100 and Smallcap 100 indices witnessing declines of 0.9 percent and 1.3 percent, respectively. The bearish sentiment was prevalent, with a 1:3 ratio favoring bears.

According to the pivot point calculator, the Nifty may find support at 19,714, followed by 19,681 and 19,628. Conversely, immediate resistance is seen at 19,820, followed by 19,853 and 19,906.

Nifty Bank

The Bank Nifty index played a pivotal role in exerting selling pressure on the market on September 21. The banking index recorded a substantial drop of 761 points, equivalent to a 1.7 percent decrease, closing at 44,624. This downturn resulted in the formation of a long bearish candlestick pattern on the daily charts, accompanied by a negative crossover in RSI.

Jatin Gedia, Technical Research Analyst at Sharekhan by BNP Paribas, highlighted that the Bank Nifty breached both the 20 and 40-day moving averages, a sign of underlying weakness. Furthermore, the daily momentum indicator displayed a negative crossover, signaling a sell signal. Gedia anticipates the index targeting levels of 44,500 – 44,360, coinciding with the 20-week moving average and the 78.6 percent Fibonacci retracement level.

As per the pivot point calculator, the banking index is projected to find support at 44,570, followed by 44,408 and 44,147. On the upside, initial resistance levels are expected at 45,092, followed by 45,254 and 45,515.

Call and Put Options Data

Analysis of options data reveals that the maximum weekly Call open interest (OI) is concentrated at the 20,000 strike, boasting 79.79 lakh contracts, which may serve as a significant resistance for the Nifty. This is followed by the 20,300 strike with 68.63 lakh contracts, while the 19,900 strike holds 64.14 lakh contracts.

Meaningful Call writing has been observed at the 19,800 strike, accumulating 50.99 lakh contracts, closely trailed by the 19,900 and 20,300 strikes, adding 45.14 lakh and 40.25 lakh contracts, respectively.

Conversely, the maximum Call unwinding activity occurred at the 18,500 strike, shedding 30,800 contracts. This was followed by the 19,300 strike and 18,800 strike, which reduced positions by 9,050 and 8,200 contracts, respectively.

On the Put side, the maximum open interest was observed at the 19,000 strike, with 73.29 lakh contracts, making it a crucial support level for the Nifty in the upcoming sessions. The 19,500 strike ranked second with 61.52 lakh contracts, while the 19,800 strike held 53.27 lakh contracts.

Significant Put writing emerged at the 19,700 strike, adding 25.91 lakh contracts, followed by the 19,000 strike and 19,800 strike, accumulating 22.5 lakh and 21.97 lakh contracts, respectively. Put unwinding activity was notable at the 20,000 strike, where 8.87 lakh contracts were shed, followed by the 20,100 strike and 20,200 strike, which saw reductions of 6.43 lakh and 2.99 lakh contracts, respectively.

Stocks in Focus

Several stocks witnessed noteworthy developments:

• Glenmark Pharmaceuticals: The company announced a definitive agreement to divest a 75 percent stake in its subsidiary, Glenmark Life Sciences (GLS), to Nirma for Rs 5,651.5 crore. Post-transaction, Glenmark Pharma will retain a 7.84 percent stake in GLS. Nirma plans to make a mandatory open offer to all public shareholders of GLS.

• Vedanta: The mining company obtained board approval to raise up to Rs 2,500 crore through non-convertible debentures (NCDs) on a private placement basis.

• SJVN: The Government of India will exercise its greenshoe option, representing a 2.46 percent stake or 9,66,72,961 shares, for the offer-for-sale of the hydroelectric power generation company on September 22. This is in addition to the base issue size of 9,66,72,961 shares, making the total offer size up to 19,33,45,923 equity shares, equivalent to 4.92 percent of the total paid-up equity.

• Zaggle Prepaid Ocean Services: The business spend management software and services provider made its debut on the BSE and NSE on September 22 at an issue price of Rs 164 per share.

• Infosys: The IT services provider will offer its Finacle Digital Banking Suite to Nigeria’s Guaranty Trust Bank for its multi-country digital transformation program.

• Wipro: Jatin Pravinchandra Dalal has resigned as Chief Financial Officer, with effect from November 30. Aparna C Iyer has been appointed as Chief Financial Officer, effective immediately.

• Samhi Hotels: The company made its stock market debut on September 22 at an issue price of Rs 126 per share.

FII and DII Data

Foreign institutional investors (FII) were net sellers, divesting shares worth Rs 3,007.36 crore, while domestic institutional investors (DII) purchased stocks worth Rs 1,158.14 crore on September 21, according to provisional data from the National Stock Exchange (NSE).