Stock market guide for May 23: Nifty F&O expiry, Nvidia, ITC, IndiGo Q4

All you need to know before the market opens on Thursday: Gift Nifty hints tepid start; IT stocks likely to be in focus post Nvidia earnings; ITC, IndiGo also to report March quarter results today.

Pre-market update for Indian stock markets Thursday, May 23, 2024: The Sensex and the Nifty are likely to start today’s trading session on a subdued note amid tepid global cues post release of the minutes of the FOMC April 30-May 1 meeting.

Back home, IT stocks will be in focus post solid performance by Nvidia. That apart, the weekly Nifty options expiry and anxiety ahead of the upcoming elections result may weigh on the market sentiment.

Analysts cautioned against getting overconfident and indulging in aggressive bets ahead of the Lok Sabha election outcome in less than two weeks now. 

Vinod Nair, Head of Research, Geojit Financial Services recommends that the market may underperform in the short term as they wait for the election outcome, with FIIs staying on the sidelines.

Among individual stocks, on Thursday, shares of ITC, InterGlobe Aviation, JK Lakshmi Cement, ICRA, Bayer Cropscience, Igarashi  Motors, Kirloskar Electric Company, Landmark Cars, Nucleus Software, Orchid Pharma, Page Industries, PCBL, Puravankara, Saregama India, Schneider Electric Infrastructure, Shreyas Shipping, SML Isuzu, Steel Strips Wheel, Taj GVK Hotels, Tata Investment Company and Vaibhav Global will be in focus as these companies announce Q4 results.

Global cues for the market on Thursday

According the minutes, Fed officials remained concerned over the progress of inflation towards the 2 per cent mark. Post the latest meeting, even as inflation cooled-down, several Fed officials stressed the need for further data to get the belief that inflation was indeed under control.

Following which, the US market ended in red last night. Dow Jones slipped 0.5 per cent. The S&P 500 was down 0.3 per cent, and Nasdaq 0.2 per cent. 

However, in post market trades, Nasdaq futures quoted 0.4 per cent higher led by a 6 per cent surge in market favourite Nvidia, which reported positive earnings and guidance. The stock quoted above $1,000-mark for the first time, as the chip maker also announced 1:10 stock split.

Near home, in the Asia-Pacific region, the S&P ASX 200 and All Ordinaries dropped a per cent each while Nikkei added 0.4 per cent.

Among commodities, Gold futures quoted around $2,377 levels, while Brent Crude Oil eased to $81.30 per barrel. The 10-year US bond yield steadied around 4.43 per cent.

At 07:00 AM, Gift Nifty futures quoted around 22,645, hinting at a likely flat to negative start on the Nifty 50 index.

Weekly Nifty Options data

The Nifty Put-Call ratio for options expiry today stands at 1.16, showing presence of higher open interest (OI) in Nifty Puts versus Nifty Calls. This in general implies presence of more Put options writers, hence a likely positive bias for the index.

As per the options data, highest OI in Nifty Puts stands at 22,500 Put followed by strong build-up seen at 22,600 Put in trades yesterday. The price action indicates likely strong support for the Nifty in the range of 22,480 – 22,540. On the other hand, maximum OI among Calls stands at 23,000-mark, with notable OI build-up seen at 22,800 Call. 

Data suggests that sustained trade above 22,680 can trigger a sharp short-covering rally on the Nifty 50 index.

FII, DII flows

Foreign portfolio investors (FPI) were net sellers of stocks worth Rs 686 crore on Wednesday. On the other hand, domestic institutional investors (DIIs) net purchased shares to the tune of Rs 962 crore yesterday.

Trading strategy for Thursday, May 23 - Should you be a buyer or seller today? Here’s what market experts recommend:

Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates

Technically, the Nifty is holding above the 34-day exponential moving average (34-DEMA), which is placed near 22,340. However, around 22,800, the Nifty has formed a bearish engulfing candle earlier. Therefore, the index is likely to consolidate in the band of 22,300-22,800 in the short term. Traders should remain cautious at higher levels.

Bank Nifty on Wednesday closed below its 21-day exponential moving average (21-DEMA) of 48,040 levels and sustained below it, indicating weakness. On the downside, the 100-day exponential moving average (100-DEMA) is near 47,180. Thus, in the short term, we expect the Bank Nifty to consolidate in the range of 47,180-48,260.

Rajesh Bhosale, Technical Analyst, Angel One

Going forward, the 22,700 – 22,800 range is crucial for the Nifty, and how prices react around this zone will be important in the next few sessions. Although there are no signs of weakness, it is advisable not to make aggressive long bets and to consider booking some profit as the Lok Sabha election results approach.

For the next momentum move, prices need to close above 22,800, which could push the Nifty towards 23,000 – 23,100. However, this seems unlikely for the current trading week. On the downside, 22,400 is a key support level, and dips towards it can be seen as buying opportunities.

Rupak De, Senior Technical Analyst, LKP Securities 

The Nifty continues to trend bullishly, finding support at 22500. The index has been moving higher within a rising channel. The trend is likely to remain strong as long as it stays above 22,500. On the higher end, the index might move towards 22,800 in the short term, with immediate support at 22,600.