The Indian stock market is expected to remain volatile in the near term as sentiment remains subdued over elevated crude oil prices and rising global bond yields. According to Jay Thakkar, Vice President & Head of Derivatives and Quant Research at ICICI Securities, the benchmark equity indices extended their losing streak to hit three-month lows, with the Nifty closing the week at 23,398, down around 2.7% for the week. The Sensex also declined around 2.9% during the week, marking the fifth consecutive weekly decline. Thakkar expects the India VIX to test the upper end of the range at 15-16 levels on an immediate basis, which he believes will not be a good sign. The next put base is now at 23,000 levels, with the broader range expected to be 23,000 – 24,000 levels. 23,200 is now an important immediate support for Nifty, while 23,500-23,600 will act as the immediate resistance zone.
Bank Nifty ended 482.00 points, or 0.85%, lower at 56,295.55 on Wednesday, slipping below the short-term support of 57,000 level. As reported by ICICI Securities, the next support for Bank Nifty index lies at 55,000 level, which has the decent put base on a cumulative basis of the next three series. On the upside, 56,800-57,000 is likely to be the first major resistance zone, and until it closes above the same, the overall trend is likely to be negative to sideways. The max pain level is 57,500, hence, a close above the same is critical in order to reverse the ongoing downtrend.
CG Power and Industrial Solutions has witnessed long additions, along with a pattern of higher highs and higher lows, indicating a positive trend. According to ICICI Securities, options data supports the bullish setup with significant put additions between the ₹840 and ₹920 strikes, coupled with call unwinding at the ₹900 strike. The stock is trading well above its max pain level of ₹900, making it a key near-term support. Thakkar recommends buying CG Power futures in the ₹920–930 range with targets of ₹955 and ₹970, while maintaining a stop loss below ₹900. Apollo Hospitals Enterprise futures have broken out of a sideways consolidation, with options data showing significant put additions across the ₹8,700–9,000 strikes. The stock is trading comfortably above its max pain level of ₹8,800, which is expected to act as near-term support. Thakkar recommends buying Apollo Hospitals futures in the ₹8,980–9,010 range with targets of ₹9,200 and ₹9,300, maintaining a stop loss below ₹8,860.
Bharat Dynamics has broken below its consolidation range, accompanied by a rise in futures open interest, indicating fresh short build-up. As reported by ICICI Securities, while the Nifty Defence sector has seen buying interest recently, most F&O stocks, apart from HAL, have only witnessed a partial rebound and have not seen significant short covering. Bharat Dynamics' breakdown has now shifted its trend from sideways to negative. Options data indicates limited support below ₹1,240, as the stock has breached its major put base. Strong call additions have emerged at the ₹1,260–1,300 strikes, indicating increased resistance. Thakkar recommends selling Bharat Dynamics futures in the ₹1,210–1,195 range with targets of ₹1,140 and ₹1,120, maintaining a stop loss above ₹1,245.
Thakkar recommends a selective, contra strategy at market extremes and identifies three stocks for potential gains - Mankind Pharma, CG Power and Kotak Mahindra Bank - for the coming sessions. The key trigger for a sustainable recovery would be a combination of lower crude oil prices, cooling US bond yields and a less hawkish Federal Reserve. The most important indicator for Indian equities next week will not just be the Nifty level but whether Brent crude is able to sustain above $100 or moves back below $100 towards $95. If Brent starts moving back below $100, it can trigger a meaningful relief rally in Indian equities. The India VIX continues to remain an important indicator to watch, with Thakkar noting that despite the sharp correction, VIX has not yet witnessed the kind of extreme spike that normally accompanies a major market panic, remaining below the 12 zone.
