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Pre-stock market update for Friday, June 07, 2024: The Sensex and the Nifty are likely to start Friday’s trading session on a quiet note amid subdued cues from global peers. The RBI policy outcome today will likely dictate the market trend. The RBI is widely expected to leave interest rates untouched.
"Although the CPI inflation declined to 4.83 per cent, food inflation remains stubbornly high at 8.7 per cent. As a result, RBI is likely to maintain the status quo until inflation is brought within the target range of 4 per cent +/- 2%. Other challenges include extreme weather conditions, stock market volatility, and geopolitical tensions” said Vinod Nair, Head of Research, Geojit Financial Services in a note.
The market will focus on the inflation and GDP forecast of FY25, a reduction in inflation and increase in GDP trajectory will be taken positive, the note stated.
That apart, market will continue to track news flow on the new government formation scheduled to take place on June 09, Sunday. Some volatility towards the end of the trading session cannot be ruled out owing to the weekend factor and portfolio allocations in the coalition government.
At 07:00 AM, Gift Nifty futures quoted around 22,903 - indicating a likely quiet start to the trading action on the Nifty 50 index.
Shares of rate sensitive companies, such as – auto, bank, NBFCs and real estate are likely to be in focus amid the RBI policy commentary.
Fund flow action
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Foreign institutional investors (FIIs) remained heavy sellers for the third straight trading session. FIIs net sold stocks worth Rs 6,868 crore on Thursday, while domestic institutional investors (DIIs) net bought shares to the tune of Rs 3,718 crore.
In the derivatives segment, FIIs maintained the bearish stance, with index long-short ratio at 0.21. At the end of trading on June 06, FIIs held 82.84 per cent short positions in index futures.
Meanwhile, retail investors pared some long positions in index futures, but continue to hold 64.08 per cent longs in index futures, and 91.97 per cent longs in stock futures.
Global mood
Overnight, the US market ended on a flat note amid profit-taking in retail-related and select technology stocks, including Nvidia, as Nasdaq and the S&P 500 quoted at record high levels.
The US 10-year yield increased a wee bit to 4.299 per cent. Among commodities, Gold futures quoted near the $2,400-mark, while Brent Crude Oil futures rose above the $80 per barrel.
Equity markets, in the Asia-Pacific region, traded with a positive bias. Kospi jumped over 1 per cent. Australia’s - All Ordinaries and the ASX 200 indices added 0.2 per cent, while Japan’s Nikkei was flat.
Trading strategy for Friday, June 07 - 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, on daily scale, the Nifty has formed a small bullish candle. On the upside, the immediate resistance for the index is placed near the 23,000 level, followed by 23,340. The 34-Day Exponential Moving Average (34-DEMA) is positioned near 22,520, which will act as immediate support for the index, followed by the 22,000 level.
The Bank Nifty has formed a tiny red candle on the daily scale, indicating a pause after strong upward momentum. The 34-Day Exponential Moving Average (34-DEMA) is positioned near 48,190, which will act as immediate support for the index, followed by 47,500, where the 100-DEMA is placed. On the upside, the immediate resistance for the index is placed near the 50,000 level, followed by 51,000.
Ashwin Ramani, Derivatives & Technical Analyst, SAMCO Securities
Call writers (Bears) exiting and additional put writing was observed at all Nifty strikes from 22,000 until 22,500 which kept the Index steady throughout the day. Strong put writing was observed at the 22,600 & 22,700 Strikes in the Index. The call & put writers fought fiercely at the 22,800 Strike and the option activity at this strike will provide cues about Nifty’s Intraday direction.
Strong put writing was observed at the 48,500 & 49,000 Strike in Bank Nifty. The call writers (Bears) created pressure on the put writers at the 49,000 Strike. The option activity at the 49,000 Strike will provide cues about Bank Nifty future direction.
Om Mehra, Technical Analyst, SAMCO Securities
The Nifty hourly chart indicates that the short-term trend remains bullish, presenting any pullback towards 22,750 as a buying opportunity for the level towards 23,000, followed by 23,180. A move below 22,700 could take the index to its 20-day moving average (DMA), which is positioned near 22,500 and serving as crucial support.
The Bank Nifty is currently holding above the 20-day and 50-day moving averages. The index closed above the 61.8 per cent Fibonacci retracement which remains at 49,180, providing a solid base. The immediate resistance is placed at 49,700, and crossing this level might push the index to the 50,200 - 50,350 levels.
Osho Krishan, Sr. Analyst - Technical & Derivative Research, Angel One
From a technical standpoint, the 20-day Simple Moving Average (SMA) around 22,600 and the 61.8 per cent Fibonacci retracement level of 22,552 are expected to provide a supportive foundation for the Nifty on an intermediate basis. On the higher end, the 23,000 mark withholds the major resilience and needs a cautious stance as we approach the same.
Rupak De, Senior Technical Analyst, LKP Securities
The Nifty on Thursday rose after a bullish harami pattern formation on the daily timeframe. The index oscillated between 22,650 and 22,900. In the near term, the Nifty might continue to remain in the 22,600-23,000 trading band.
