Trade Setup for November 6: Nifty faces twin pressure of global tech sell-off, expiry after holiday

Indian equities will resume trading on Thursday after the mid-week holiday but the bulls will not be happy looking at how three out of the last four trading sessions have panned out.

If pressure at higher levels was not enough, Indian equities now have to contend with two days of global market action, one of which wiped out $500 billion in just semiconductor stocks across the globe on concerns of stretched valuations.

Thursday will also be the first weekly expiry of the Sensex contracts for the November series. The market will also have to react to a host of results that were reported after market hours on Tuesday and over the course of Wednesday's holiday.

We had mentioned to you on Tuesday that 25,650 - 25,700 could be a range where the Nifty finds some support. However, after trying to sustain within that range for most parts of Tuesday's session, the index gave up those levels, eventually closing at the 25,600 mark. Further downward pressure could mean October 17's lows of 25,508 may come into play.

On the upside, the 25,650 - 25,700 zone will be the first level to watch before the index could attempt reclaiming the 25,750 mark.

More than the Nifty underperformance, what would have disappointed the bulls further would have been the Nifty Bank. The index, which had closed above the mark of 58,000 on Monday, could not build on those gains, even as shares of SBI recovered from the lows of the day to end higher after its results.

For the Nifty Bank, Tuesday's low of 57,730 - 57,700 zone will be the first line of defence, and the 58,000 level on the upside is something that the bulls would aspire to close above on the Sensex weekly expiry session.

Thursday's session will see a host of earnings reactions. Sun Pharma, Britannia, Paytm, Aurobindo, BEML, IndiGo, Whirlpool, Metropolis, KPR Mill, Saregama, Redington, MAS Financial, Muthoot Micro, MTAR Tech and a host of other names will be reacting to their results.

Aarti Industries, ABB, ACE, Amber Enterprises, Apollo Hospitals, Bajaj Housing Finance, DAM Capital, Devyani International, Godrej Properties, HCC, Indigo Paints, LIC, Lupin, Linde India, MCX, UPL, VST Tiller, Protean e-Gov, NCC, NHPC, Nesco are some of the stocks reporting their results on Thursday.

Also keep an eye out on Asian Paints and Grasim in Thursday's session as Birla Opus' CEO quit on Wednesday. Grasim will also be reacting to its results.

"If the index manages to defend 57,630, then a short-term relief rally could be possible, but a decisive break below 57,630 could lead to further weakness. On the higher side, 58,580 will act as a strong hurdle for the index," Hrishikesh Yedve of Asit C Mehta Investment Managers said.

Rajesh Bhosale of Angel One said that till the pivotal zone of 25,500 and the breakout neckline of 25,430 remain intact, dips should be used as buying opportunities on the Nifty. On the upside 25,750 - 25,800 will be an immediate hurdle and a breakout above that could take the index back towards 26,000.

"Overall, the market remains in a consolidation phase, with traders adopting a cautious stance ahead of key global and domestic cues. A sustained move above 25,700 will be essential to revive bullish momentum, while failure to hold above the 25,500 zone could invite further weakness in the near term," Amruta Shinde of Choice Broking said.