 "Stock market guide for June 10: Nifty eyes new high; Asian shares mixed")
Pre-stock market update for Monday, June 10, 2024: Equity market will be hoping for some stability to return following last week’s extreme movement, which saw the BSE Sensex swing over 6,500 points and the Nifty over 2,000 points in intra-week deals amid the Lok Sabha election outcome.
Prime Minister Narendra Modi on Sunday evening took the oath of office as the head of a 72-member Council of Ministers for a third successive term. The focus will shift to the Budget for 2024-25 to be presented in less than a month, under the new coalition government. READ MORE
That apart global factors, such flip-flop in expectations of likely US Fed rate cut timing, persistent FII selling and geopolitical tensions will continue to weigh on the market sentiment,
At 07:00 AM, Gift Nifty futures quoted around 22,290 levels - indicating a likely tepid start to the trading action on the Nifty 50 index.
The NSE Nifty settled at 22,290 on Friday and is less than 50 points shy from its record high.
Fund flow action
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After having net sold stocks worth Rs 42,200 crore in the month of May, foreign institutional investors (FIIs) so far in June have net sold shares to the tune of Rs 13,718 crore. On Friday, however, FIIs were net buyers to the tune of Rs 4,391 crore.
In the derivatives segment, FIIs reduced their short positions in index futures, with index long-short ratio rising to 0.42. At the end of trading on June 07, FIIs held 70.40 per cent shorts in index futures as against 72.84 per cent in the previous trading session.
Commenting on the FII exodus, Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services said, FPIs (Foreign portfolio investors) regard Indian valuations to be very high and, therefore, capital is getting shifted to cheaper markets.
The FPI pessimism regarding Chinese stocks appears to be over and there is a trend of investing in Chinese stocks listed in the Hong Kong Exchange since the valuations of Chinese stocks have turned very attractive, Vijayakumar said in a note.
Meanwhile, domestic institutional investors (DIIs) were net sellers of shares worth Rs 1,290 crore on Friday.
Global mood
On Friday, the US market ended near the lows of the day as stronger-than-expected jobs data fanned fears of a delayed rate cut. Dow Jones, Nasdaq and the S&P 500 slipped up to 0.2 per cent each.
The focus now shifts to the upcoming inflation numbers and US Fed policy meeting on Wednesday.
Among commodities, Gold futures tumbled to near $2,300-mark, while Brent Crude Oil futures consolidated around $80 per barrel.
Equity markets, in the Asia-Pacific region, traded on a mixed note. Japan’s Nikkei rose 0.5 per cent, while Kospi was down 0.9 per cent.
Trading strategy for Monday, June 10 - Should you be a buyer or seller today? Here’s what market experts recommend:
Ashwin Ramani, Derivatives & Technical Analyst, SAMCO Securities
Strong put writing was observed at the 23,000 Strike in Nifty. The 23,100 & 23,200 Strikes also saw significant put writing, which led the strong up move in Index on Friday.
A follow up buying post the channel breakout can drive a fresh leg of rally in the Index. The option activity at the 22,300 Strike will provide cues about Nifty’s upcoming direction.
In case of Bank Nifty, all Strikes from 49,000 until 49,600 saw call writers exiting and put writing. The call writers have sizeable positions at the 50,000 Strike and the option activity at this strike will provide cues about Bank Nifty’s upcoming direction.
Om Mehra, Technical Analyst, SAMCO Securities
The Nifty closed above the high it made on 4th June, and has formed a bullish candle with a large body in a daily time frame indicating strong buying interest and the bull's confidence.
Currently, Nifty is holding its position above the previous resistance zone of 23,000 which is now acting as a crucial support level. Any minor pullback towards 23,100 could present a buying opportunity. If the upward momentum continues, the index might move towards 23,500-23,550 levels.
The Bank Nifty firmly holds above the 20-Day moving average (DMA). The index has displayed a positive bias with higher highs and higher lows on the hourly chart and formed a bullish candle on the daily chart, signaling the potential for further gains.
To maintain this upward momentum, Bank Nifty must stay above the 49,500 levels. If 49,980 is broken on the upper side, it may lead to a move above the resistance level of 50,670, which was its previous all-time high the high made on Tuesday (June 4).
Osho Krishan, Sr. Analyst - Technical & Derivative Research, Angel One
The phrase "All's well that ends well" perfectly describes the roller-coaster journey Indian equities experienced last week. Amidst the Lok Sabha election verdicts, the market faced heart-stumbling moments, making it an eventful and nerve-wracking week.
From a technical standpoint, the Nifty positioned itself above all the significant EMAs, slightly above the higher band of the ‘Rising Channel’, showcasing an inherent bullish quotient. As the benchmark settles near its all-time high (ATH), it becomes challenging to forecast the ultimate resistance zone, although 23,500 is very close by now.
On the lower side, 23,000-22,800 is the zone that is likely to provide support in case of any upcoming intra-week dips for the index.
Rupak De, Senior Technical Analyst, LKP Securities
The short-term trend for the Nifty looks very positive as the index closed near an all-time high. Going forward, the market remains a buy on dips as long as 23,000 is not broken. On the higher end, the index might move towards 23,500-23,600. On the lower end, profit booking might occur only below 23000.