Trade Setup for October 31: Nifty likely to stay in profit-booking mode

Bears remained in control on Thursday as Nifty bulls stayed on the sidelines following a slightly less dovish commentary from the US Federal Reserve.

After showing a sustainable bounce on Wednesday, the Nifty slipped into weakness on Thursday. The index opened 70 points lower and extended losses through the early to mid-session. Intraday recoveries failed to hold, and the index finally closed near the day's low.

Nifty ended the session down 176 points at 25,878.

The broader market closed in the red, with large caps underperforming midcaps. Nifty failed to hold the 25,900 mark, with nearly 40 of its constituents ending in the red.

Among individual stocks, Coal India, Larsen & Toubro, and Hindalco were the top gainers, while Dr. Reddy’s, Cipla, and HDFC Life led the laggards.

Pharma stocks bore the brunt of selling pressure, with Dr. Reddy's Laboratories emerging as the top Nifty loser following developments related to Semaglutide.

Cipla shares tumbled up to 4% after the company informed exchanges that MD and Global CEO Umang Vohra will not seek reappointment.

Barring Nifty Realty, all sectoral indices closed in negative territory. Financial Services, Healthcare, and Pharma were among the worst hit, reflecting broad-based weakness across sectors.

The broader markets outperformed the benchmark, ending with only minor losses. The Nifty Midcap and Smallcap 100 indices dipped 0.1% each, compared with a 0.7% fall in the Nifty.

Friday's session will see the launch of eyewear retailer Lenskart Solutions' ₹7,278 crore IPO, priced in the range of ₹382-₹402 per share, valuing the company at around ₹69,741 crore post-issue.

According to Nagaraj Shetti of HDFC Securities, the near-term trend of Nifty remains positive, though the short term is in profit-booking mode. He expects the index to find support around 25,800-25,700 levels before bouncing back.

Hrishikesh Yedve of Asit C. Mehta Investment Intermediates said that as long as Nifty remains below 26,100, it is likely to consolidate within the 25,670-26,100 range. A breakout above 26,100 could open the doors for a move towards 26,280, the previous all-time high, he added.

Rupak De of LKP Securities said that while the short-term trend remains up with the index trading above its moving averages, a minor extension of the current correction cannot be ruled out.

For Friday's trade, De noted that if Nifty sustains below 25,900-25,950, it may test 25,800 or lower. On the upside, a decisive move above 25,950 could lend strength to the bulls.

The Bank Nifty index opened lower and witnessed profit booking, closing 260 points down at 58,031. Yedve said major support is seen near 57,630, with an immediate hurdle around 58,580. A break above 58,580 could push the index towards 59,000, he added.