The US rate cut happened as expected but the trends remained divided and profit-booking at higher levels clearly poured. However, the lack of clarity continues to remain, forcing us to take a relook at the current set of considerations.
Here are three stocks to buy or sell on 31 October, as recommended by Raja Venkatraman of NeoTrader.
On 30 October, the Nifty 50 slipped 0.68% to close below the 25,900 mark as investor sentiment turned cautious following hawkish remarks from the US Federal Reserve chair Jerome Powell. His comments revived concerns about prolonged high interest rates, prompting broad-based profit-booking across sectors. Global uncertainty was further heightened by the extended meeting between US President Donald Trump and Chinese President Xi Jinping, which stirred hopes of progress on trade negotiations.
On the domestic front, Coal India and Larsen & Toubro emerged as the top gainers in the Nifty pack, while Dr. Reddy's Laboratories and Cipla led the losers. Sectorally, all indices, except Nifty Realty, ended in the red, with broader markets echoing the benchmark's weakness. Both Nifty Midcap 100 and Smallcap 100 declined.
The advance/decline ratio reflected bearish breadth, with 328 of Nifty 500 stocks closing lower. Technically, support lies at 25,800-25,750, while resistance is seen at 26,030-26,050. A breakout above 26,050 could trigger a rally.
Volatility was the key feature of the market throughout this week and the market was whipped around quite a bit as global trends were the main drivers of the sentiment.
Despite the much-anticipated US Federal Open Market Committee announcing the verdict as anticipated, the trends failed to sustain. There really wasn't much by way of local news flow to contain the volatility induced. The moves were also reasonably large, creating sufficient moves to bring people in, only to get knocked out the following day! Trading, therefore, was quite difficult through the week.
A continued oscillation and failure to close above 26,000 could now put the effort to move higher under threat the descending channel resistance after a strong decline is seen at the start of the week. Lack of participation at the moment is clearly visible in the indices despite the quarterly numbers showing an improvement. Now, with limited encouraging cues available we maintain that the rallies shall be used to sell into.
As we head into the last trading day of the week, we could experience some inconsistency as we are nearing an important inflexion zone. However, the trends are still circumspect and are witnessing limited market participation. Nifty now seeks to contest the support around the 25,600 mark that has now opened up, while Bank Nifty is struggling to hold above 58,000 to clear the air of uncertainty.
For Nifty to stage an upmove, the spot Nifty needs to move above 26,100, which acts as a big hurdle and is the immediate resistance for bullish revival. With the Open Interest data clearly indicating lack of bullish intent, one should keep tracking a 30-minute range breakout on Friday, as it continues to be an important metric for creating some longs.
As indices are showing signs of hesitation, one should look to encash some stock specific action.
Raja Venkatraman is co-founder, NeoTrader. His Sebi-registered research analyst registration no. is INH000016223.
Investments in securities are subject to market risks. Read all the related documents carefully before investing. Registration granted by Sebi and certification from NISM in no way guarantees performance of the intermediary or provide any assurance of returns to investors.