 "Stock market guide for May 28: Gift Nifty up, LIC in focus; Asian mood dull")
Pre-market update for Indian stock markets Tuesday May 28, 2024: The Sensex and the Nifty may start today’s trading session on a tentative note amid lack of directional cues from global peers.
At 07:00 AM, Gift Nifty futures quoted around 23,022, suggesting a likely opening gain of up to 50-odd points on the Nifty 50 index.
Barring the sudden bout of volatility in the latter half of trading day on Monday, the Sensex and the Nifty had displayed immense strength and notched up fresh record highs in intra-day deals. The BSE Sensex registered a new summit at 76,010, while the Nifty 50 scaled a peak of 23,111.
Analysts have attributed the recent gains to better earnings growth, expectations of a revival in private capex and a moderation in FIIs selling intensity.
Going ahead, India's Q4 GDP and US inflation figures later week will act as key triggers for the market, ahead of the big bang election numbers early next week.
Fund flow action
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Foreign institutional investors (FIIs) were net sellers of stocks to the tune of Rs 541 crore on Monday, whereas; domestic institutional investors net bought shares to the tune of Rs 923 crore.
In the derivatives segment, FIIs have now turned net long in index futures. Their net longs stand at 51.8 per cent as against mere 26.23 per cent 8 trading sessions ago. The NSE data shows, proprietary traders have increased net shorts to 64 per cent.
Benign global mood
The US market was shut for trading on Monday; stock futures quoted marginally in red in off-market deals.
Among commodities, Gold futures quoted around $2,353 levels, while Brent Crude Oil rose to $83 per barrel. The 10-year US bond yield quoted around 4.447 per cent.
Markets in the Asia-Pacific region were trading on a flat note this morning. The Australian indices, Japan's Nikkei and Malaysia's Kospi were all quoting near the previous trading sessions close.
Stocks in focus
LIC stock will be in focus after the state-run insurance behemoth reported 2.5 per cent year-on-year (Y-o-Y) growth in net profit to Rs 13,762.64 crore, impacted by wage revision and arrears. LIC’s board recommended a final dividend of Rs 6 per share.
Shares of 3M India, Aditya Birla Fashion Retail, Aster DM Healthcare, Brigade Enterprises, Campus Activewear, DreamFolks Services, EIL Hotel, Engineers India, Gensol Engineering, GIC RE, GNFC, IRCTC, MMTC, NBCC, Sundaram Brakers, TGB Hotels, TTK Prestige, Unitech and Wockhardt Pharma among 444 companies scheduled to announce March quarter results today.
Trading strategy for Tuesday, May 28 - Should you be a buyer or seller today? Here’s what market experts recommend:
Ashwin Ramani, Derivatives & Technical Analyst, SAMCO Securities
The India VIX rose 6.83 per cent on intra-day basis, as it peaked at 26.20, its 52-week high level on Monday. The volatility in the market is peaking up with the passage of every election phase and as we move closer to the election result day, June 4.
The Nifty took resistance around the upper channel of 23,100 levels and tumbled down like a pack of cards. The call writers (Bears) have sizeable positions at the 23,100 Strike. If call writers (Bears) exit from the 23,100 Strike, then Nifty is likely to continue its ongoing rally.
All Strikes from 48,500 until 49,000 saw call writers (Bears) exiting and put writing (Bulls adding exposure). Significant put writing was observed at all strikes from 49,000 until 49,500. The put writers (Bulls) have sizeable positions at the 49,000 Strike and the option activity at this strike will provide cues about Bank Nifty’s upcoming direction.
Om Mehra, Technical Analyst, SAMCO Securities
The immediate support for the Nifty stands at 22,800 level, corresponding to the 23.6 per cent Fibonacci retracement. The next support level is at 22,750, as indicated by the lower band on the hourly chart. Any pullback towards these levels could present a buying opportunity. The primary trend remains strong but the Nifty might oscillate in broader range after the recent upsurge.
The daily RSI remains strong, holding above the 60 level, indicating continued momentum. Immediate support for Bank Nifty is at the 49,000 level, followed by 48,800. The Bank Nifty continues to exhibit higher highs and higher lows on the hourly chart. The index would show signs of weakness only if it falls below 48,600. Until then, any short-term pullbacks should be viewed as buying opportunities.
Osho Krishan, Sr. Analyst - Technical & Derivative Research, Angel One
From a technical standpoint, the Nifty has reverted from the upper band of the ‘Rising Channel’, suggesting a potent resilience for the index in the near term. Also, the advance-decline ratio favoring the bears portrays the exhaustion among the bulls.
At the current juncture, the upper band of the channel placed around 23,150-23,200 is likely to be seen as an intermediate hurdle. On the other hand, the neckline of the breakout around 22,800-22,750 is expected to provide a cushion to the benchmark. For now, the index is likely to hover within the aforementioned range with bullish biases, and one needs to act accordingly and use proper risk management.
Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates
The Nifty found trend-line resistance at 23,110 and witnessed profit booking, leading to the formation of a dark cloud cover. Thus, in the short term, 23,110-23,200 will act as a resistance points. On the downside, the recent breakout point of 22,800 will act as key support for the index.
The Bank Nifty index has formed a shooting star candlestick pattern on the daily scale. If the index sustains below the low of the shooting star candle at 49,051 levels, then weakness could extend further. As of now, the Bank Nifty trend is up, but on the higher side, 49,690 and 50,000 will remain hurdles for the Bank Nifty in the short term.
Primary Market Update
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