 "Dow tops 40K, Gift Nifty at 22550; What's moving the stock market on May 18")
Pre-market stock update for May 18, Saturday: Equity benchmark indices are likely to start trade in today’s (Saturday) additional trading session on a positive note, following a record close by Dow Jones in the US.
Equity markets, both the BSE and NSE, are open today in order to test their backup system preparedness in the event of any foreseen eventuality.
Trading today will be in two sessions, the first session will be from 9:15 am - 10 am on the primary site, followed by a shift in trading to the Disaster Recovery Site (DRS) from 11:30 am - 12:30 pm.
Also do note, the equity markets will be shut for trading on Monday, May 20 on account of Lok Sabha elections in Mumbai.
Cues for the day
Overnight, in the US, Dow Jones ended atop the 40,000-mark for the first time on the back of strong corporate earnings and hopes of a rate cut. The S&P 500 also closed at a new life-time high, up 0.2 per cent, while the Nasdaq ended marginally in red.
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Gift Nifty last quoted at 22,555 levels, hinting at a likely 50-odd point gain for the Nifty 50 index at the opening bell.
Even the market has staged a smart recovery from recent lows, persistent selling by foreign investors remains a concern.
Foreign portfolio investors (FPI) have pulled out $3.5 billion in Indian equity markets so far this month. The selling has come on the back of election uncertainty and rotation of flows out of India and into China, where stocks are available at half the valuations. If the selling pressure remains at current levels, this will be the worst FPI pullout since January 2023. READ MORE
Trading strategy for Saturday, May 18 - Should you be a buyer or seller today? Here’s what market experts recommend:
The 22,200 & 22,300 Strike saw call writers (Bears) exiting and put writing, which kept the Nifty steady throughout Friday, said Ashwin Ramani, Derivatives & Technical Analyst of SAMCO Securities in a note.
Strong put writing was observed at the 22,400 Strike in Nifty. The call writers (Bears) still lead the put writers (Bulls) by a fair margin at the 22,500 Strike. For Nifty to make a sharp upside move, call writers (Bears) need to exit from the 22,500 Strike, the analyst added.
The Nifty formed a piercing line pattern on the weekly chart, suggesting a sustained ongoing trend. Immediate support is seen at 22,350, while resistance is positioned at 22,620, said Om Mehra, Technical Analyst, SAMCO Securities.
Commenting on the outlook for the Bank Nifty, Om Mehra said, the index is sustaining above the 40-EMA and continues to exhibit a pattern of higher highs and higher lows within the hourly timeframe. The daily RSI has recovered from lower levels and is above the 50-mark, indicating an overall strength. Immediate support for Bank Nifty is observed at 47,750, while resistance is positioned at 48,400 followed by 48,600.
From a technical perspective, the Nifty is maintaining a strong hold above the 21-day exponential moving average (21-DEMA), which is positioned at 22,320 levels. As long as the index holds above the 22,320 levels, the rally could extend to 22,600, said Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates.
The analyst also advised traders to take some profit off the table, as we are gradually approaching the previous resistance of 22,800, where the index has formed a bearish engulfing candle.
Stocks in focus
Shares of paint companies – Asian Paints and Berger Paints – will be in focus after the companies said it cut product prices in the March quarter owing to dip in raw materials cost.
JSW Steel stock will also be in focus, after the company on Friday posted a 64.5 per cent decline in its net profit to Rs 1,299 crore for the March quarter, impacted by lower revenues, and one-time tax costs.
On Saturday, Data Patterns, Dodla Dairy, Gujarat Ambuja Exports, Gujarat Industries Power, IRIS Business Services, Jain Irrigation Systems, Krsnaa Diagnostics, Madhucon Projects, Parag Milk Foods, Patel Engineering, Tide Water Oil, Ujjivan Small Finance Bank, Vimta Labs and Rainbow Childrens Medicare are few of notable companies scheduled to announce Q4 results.