Raja Venkatraman recommends three stocks for 22 July

Global cues also weighed, with Brent crude hovering near $90 a barrel amid West Asia tensions, raising worries about India’s inflation and trade deficit outlook. Despite the weakness in large caps, broader markets showed resilience: small-caps gained 0.5% and mid-caps rose 0.3%, supported by strong earnings momentum. UltraTech Cement advanced 1.5% after robust profit, while SBI Funds Management surged 6.2% on its market debut following a $1.03 billion IPO. Overall, sectoral divergence and stock-specific moves defined the day’s trade, with investors cautious yet selective.

Outlook for trading

Markets have managed to hold on, and the rebound seen over the last few days continued to display a sense of hope, with 24000 as a key level that continues to be held. Unlike last week, this week witnessed some solidarity from all the broader indices.

While a revival is seen, we need to consider that we are still not out of the woods and this could be an intermittent rally. The triggers that we can expect in the coming week would be a mix of domestic and global factors that could impact the sentiment. Last week, the movement has been largely driven by some shorts with no clarity being witnessed at the global level, with markets being closed. Volatility shall continue to be part of the overall environment and will need some time to stabilize.

The global markets remain tensed as there is no clarity at the moment. That in turn has stoked anxiety that many central banks will start to tighten policy and raise borrowing costs, hurting corporate earnings and clouding the outlook for what had been expected to be another solid year of global economic growth.

The daily chart shown below clearly shows that the ranging action has now given away and we could gather some newsflow continues to be in play. We will need more momentum to head higher. While we note that the gap range is broken, we still need more momentum to drive higher, as the current display of bullishness seen on Wednesday was primarily some news-driven short covering rather than some genuine buying.

Looking at the option build-up at the time of expiry, we noted that the option concentration at 24000 and the call writing at 24200 levels are curbing the entire market scenario. Rolls on the short side were on the higher side and the quantum of Nifty and Bank Nifty that began with a heavy bearish outlook is holding its ground. As the war is once again rearing its head, it could now bring back the niggling worry that the bears may create a mayhem once again.

There is some attempt being made at covering the shorts, however the lack of buying interest is keeping the lid on the recovery scenario. With an attempt to move out of a ranging action, a possible short covering action may emerge today. Now, we can observe that Nifty would look at 23750, which has now turned into the next set of resistances for the recovery. We can look at how to use every pullback to buy into.

Once again, we end the week on a very dicey note as we await a more confirmed signal from see Nifty moving below 24000 decisively the Open Interest data retains that 24200 as the Max Pain Point that will come into play. With a ranging market in play, it's best to tone down the participation.

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.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.