 "Stock market guide for May 29: Nifty may open gap-down on weak global cues")
Pre-market update for Indian stock market Wednesday May 29, 2024: The Sensex and the Nifty are likely to extend the losses in opening trades this morning, mirroring weak cues from the global peers.
At 07:00 AM, Gift Nifty futures quoted around 22,840, indicating a likely gap-down of 70-odd points on the Nifty 50 index.
Benchmark indices consolidated in yesterday’s trading sessions, as traders preferred to take home some profit ahead following the recent surge to record high levels. Meanwhile, India VIX rose to a 2-year high, with less than a week to go for the Lok Sabha election results next week.
Global mood
Overnight, the US market ended on a mixed note with tech-laced benchmark Nasdaq topping the 17,000-mark for the first time driven by Nvidia rally. The index was up 0.6, the S&P 500 inched 0.1 per cent higher, while Dow Jones slipped 0.6 per cent.
That apart, the US treasury yields rose on Tuesday on the back of an unexpected rise in consumer confidence. The focus now shifts to the upcoming GDP and PCE (Personal Consumption Expenditure) data along with several Fed officials' speeches later this week.
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The 10-year US bond yield quoted around 4.553 per cent. Among commodities, Gold futures quoted around $2,360 levels, while Brent Crude Oil rose above $84 per barrel.
Markets, in the Asia-Pacific region, this morning exhibited a subdued trend. The Australian benchmarks and Kospi were down up to 0.8 per cent, while Nikkei and Taiwan traded on a flat note.
Fund flow action
Foreign institutional investors (FIIs) were net buyers of stocks worth Rs 65.57 crore on Tuesday, whereas; domestic institutional investors net bought shares to the tune of Rs 3,231.67 crore.
In the derivatives segment, FIIs long-short ratio further improved to 1.17 per cent, the highest so far this month, with net index longs at 53.96 per cent, NSE data shows.
Retail investors too seem to be taking a bold bet ahead of the Lok Sabha elections compared to the previous two general elections. Retail investors' net index longs stood at 52.87 per cent as of May 28, whereas stock futures long positions stood at 89.67 per cent. READ MORE
Trading strategy for Wednesday, May 29 - Should you be a buyer or seller today? Here’s what market experts recommend:
Osho Krishan, Sr. Analyst - Technical & Derivative Research, Angel One
From a technical point of view, there has been a mere alteration in the price chart for Nifty, but the recent small-bodied candlestick formations certainly showcased the exhaustion of the bullish strength and might attract a price-wise correction post-rally.
The 22,800-22,700 levels are likely to be seen as immediate support for the Nifty. On the flip side, 23,000-mark seems to be a significant hurdle, followed by the lifetime high zone around 23,100.
Going forward, traders are required to take a pragmatic approach, as the recent development could be seen as the initial sign of cool-off amidst overbought parameters. Also, volatility is likely to spike as we reach the exit poll, and hence, one must refrain from being aggressive on either of the sides.
Ashwin Ramani, Derivatives & Technical Analyst, SAMCO Securities
Strong call writing (Bear activity) was observed at the 23,000 Strike in Nifty. The 23,100 & 23,200 Strikes saw put writers (Bulls) exit and call writing, which kept the Index in a range throughout the day. The 22,770-22,800 zones, which acted as a resistance for Nifty earlier, is likely to act as an immediate support for the index. The call writers (Bears) are leading the put writers (Bulls) at the 23,000 Strike and the option activity at this strike will provide cues about Nifty’s future direction in upcoming session.
Bank Nifty has formed a dark cloud cover pattern on the daily chart, which is considered to be a bearish reversal pattern. Significant call writing (Bear activity) was observed at the 49,300 & 49,500 Strike in Bank Nifty. The put writers (Bulls) have sizeable positions the 49,000 Strike and the option activity at this strike will provide cues about Bank Nifty’s Intra-day direction ahead of the monthly expiry tomorrow.
Om Mehra, Technical Analyst, SAMCO Securities
The Nifty has peaked above the 23,000 mark intra-day on more than one occasion but failed to give closing above this crucial level. The NSE index has formed a bearish candle on the daily chart. The hourly chart indicates slight weakness for the upcoming session.
Immediate support is identified at the 22,800 level, aligning with the 23.6 per cent Fibonacci retracement. The next support level is found at 22,750. Fresh buying should be initiated only if the Nifty closes above 23,000.
The Bank Nifty daily chart has seen formation of a shooting star pattern, which suggests resistance at higher levels. A break below the immediate support level of 49,100 could push the index towards 48,800. For the uptrend to resume, the Bank Nifty needs to decisively break above the 49,400 mark.
Neeraj Sharma, AVP Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates
Technically, the Nifty failed to cross the high of the dark cloud cover candle that was formed on Monday. Thus, 23,110 will act as a major hurdle for the index in the short term. On the downside, 22,800-22,780 will act as a demand zone. If the Nifty sustains below 22,780, then weakness could extend further.
The Bank Nifty index has formed a dark cloud cover followed by a shooting star candle, indicating further weakness. If the index sustains below the low of the shooting star candle 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.
Rupak De, Senior Technical Analyst, LKP Securities
The Nifty remained within a range as the lack of a breakout on either side failed to provide any directional movement yesterday. Significant Call writing was observed at the 23,000 strike price, followed by the 23,100 and 22,900 strikes.
In comparison to the heavy Call writing, Put writers were less active, leading to a decline in the PCR. The high India VIX suggests that market volatility might remain elevated. On the higher end, the 22,950-23,000 zone might act as a strong resistance, and any rise may attract selling pressure. On the lower end, the Nifty might drift down towards 22,800/22,600.
Stocks in focus
Shares of Adani Group of companies will be in focus amid reports that the conglomerate is set to make a splash in the tech world. The group, reportedly, is considering the creation of customised artificial intelligence (AI) models for commercial prospects and consolidating digital services on a super app. READ MORE
Meanwhile, the Adani Enterprises, the Group’s flagship company’s board on Tuesday approved Rs 16,600 crore fundraising via the QIP route.
Hindalco stock too will be on investors radar as the Aditya Birla Group’s US-based subsidiary Novelis plans to debut on the New York Stock Exchange (NYSE). Novelis is offering 45 million shares at $18-21 apiece, representing 7.5 per cent of Hindalco’s current stake.
Novelis’ IPO could generate up to $945 million for Hindalco, the latter had acquired Novelis in 2007 in a deal that valued it at $6 billion. READ MORE
Prominent companies scheduled to announce Q4 results today include - 3i Infotech, Ansal Housing, Ashapura Minechem, Bata India, Cummins, DB Realty, Deepak Fertilisers, GR Infraprojects, Hindustan Composites, Hinudstan Oil Exploration, Jubilant Pharmova, KIOCL, Lemon Tree Hotels, Liberty Shoes, Mishra Dhatu Nigam, Shree Renuka Sugars, SJVN and Tata Steel.