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Pre-market trade set-up for Indian stock markets on Wednesday, May 22, 2024: After a listless session on Tuesday, the Indian stock markets may continue to consolidate amid lack of decisive domestic triggers, coupled with tepid global mood.
At 7:10 AM, GIFT Nifty futures were 24 points higher at 22,630.
On Tuesday, May 21, the S&P BSE Sensex moved in a narrow range of 427 points before closing 53 points lower at 73,953. The Nifty50, meanwhile, eked out gains of 27 points to end at 22,529 level.
The total market capitalisation (market-cap) of all BSE-listed companies, however, touched $5 trillion for the first time in intraday deals on Tuesday, led by a strong rally in metal, power, and Central Public Sector Enterprises (CPSEs) stocks.
Over the medium-to-long term, analysts remain bullish on the road ahead for the Indian equities and expect the Sensex and the Nifty to trend higher. READ MORE
This bullish outlook may be bolstered by the Reserve Bank of India (RBI’s) optimistic economic projection.
RBI on Indian economy
India, according to the RBI’s May Bulletin on the state of the economy, is on the cusp of long-awaited take-off on the back of rising aggregate demand, and non-food spending in rural economy. This may lead to India likely growing by 7.5 per cent in the first quarter of the current financial year (Q1FY25). READ MORE
RBI on inflation outlook
The report, however, pointed out that any durable alignment of headline retail inflation with the target of 4 per cent could recommence in the second half of FY25 and sustain until numbers closer to the target are seen during FY26, dashing hopes of any reduction in the policy repo rate in the current financial year. READ MORE
Against this, these are the trading triggers for Indian stock markets on Wednesday, May 22:
Developments in the global markets, along with investment activity of foreign institutional investors (FIIs), will sway the market action on Wednesday.
Globally, Asian markets were mixed this morning with Nikkei trading 0.7 per cent lower. On the flipside, ASX200, Kospi, and Hang Seng added up to 0.2 per cent.
Overnight, the S&P500, and the Nasdaq Composite closed at record highs, rising 0.2 per cent each, while Dow Jones gained 0.17 per cent.
FII-DII activity
On Tuesday, May 21, FIIs sold equities worth Rs 1,874.5 crore, taking their total selling to Rs 37,499.96 crore so far in the month of May.
FIIs were net buyers for only one trading session this month -- on May 17, when they bought shares worth Rs 1,617 crore.
DIIs, meanwhile, have been countering this sustained rally with net purchase of equities worth Rs 37,369.15 crore month-to-date.
IPO Alert :: Awfis Space Solutions
The Rs 599-crore initial public offer (IPO) of Awfis Space Solutions will open for subscription on May 22 and will close on May 27, 2024.
The offer includes a fresh issue of Rs 128 crore and an offer-for-sale (OFS) of up to 12.29 million equity shares. The IPO price band has been fixed at Rs 364 to Rs 383 per equity share.
According to Swastika Investmart, while the company exhibits promising top-line growth, achieving profitability remains a key challenge. Awfis has experienced negative cash flow in the past and operates in a highly competitive environment susceptible to macroeconomic fluctuations.
“Given the negative EPS, a P/E ratio cannot be calculated. Considering the potential for future growth balanced against the current financial situation and competitive landscape, we recommend a neutral stance on the Awfis IPO,” the brokerage said.
Those at Mastertrust Broking, meanwhile, said investors may subscribe to the issue only for listing gains.
Trading strategy for Wednesday, May 22: Should you be a buyer or a seller today? Here’s what markets experts recommend:
Rajesh Bhosale, Technical Analyst, Angel One:
In the upcoming session, while the undertone remains bullish, we may see consolidation in the major indices with sector rotation continuing. Traders are advised to focus on these areas for better opportunities.
As the benchmark index nears the higher end of its recent consolidation, caution is advised, and dips should be considered as buying opportunities.
Support is seen between the 20 and 50 EMA zones, ranging from 22,350 to 22,250 for Nifty50, while the 22,600 to 22,800 range remains a significant barrier that has persisted for the past two months.
With the end of the election phase approaching and the verdict nearing, volatility is likely to stay high. Therefore, traders should avoid complacent bets and prioritise regularly booking profits. Additionally, monitoring global developments is crucial, as any issues could potentially impact the recent run.
Ashwin Ramani, Derivatives & Technical Analyst, SAMCO Securities:
All the Strikes from 22,000 until 22,400 saw Call writers (Bears) exiting and additional Put writing, which led to the steady up move in the Index throughout the day. Strong Put writing was observed at the 22,500 Strike in Nifty.
The Put writers (Bulls) dethroned the Call writers (Bears) at the 22,500 Strike on May 21. If Put writers (Bulls) manage to keep the Call writers (Bears) at bay at the 22,500 Strike, then Nifty is likely to move even higher.
Mandar Bhojane, Research Analyst, Choice Broking:
On the daily chart, the Nifty formed a bullish engulfing candlestick pattern with good volume, indicating strength in the Nifty Index. If the price closes above the 22,600 level, it may further rise to 22,800 and 23,000 in the coming days.
On the flip side, 22,350 and 22,200 act as strong support levels. The RSI at 57 indicates strength in the index. Overall, the strength continues in Nifty, and the market appears ready for a new all-time high.
An analysis of Nifty Put options reveals a concentration of Open Interest (OI) at the 22,400 level, implying potential support at this level. On the Call side, significant OI concentrations are observed at the 23,000 and 23,200 levels, nearing all-time highs.
Jatin Gedia – Technical Research Analyst at Sharekhan by BNP Paribas:
The Bank Nifty consolidated within a narrow range and closed in the negative, down ~150 points, on May 21.
We believe that it is a brief pause in the overall uptrend and this consolidation should be bought into. We expect the Bank Nifty to rally towards 48,320 – 48,700 from short term perspective. The hourly momentum indicator has a negative crossover which can lead to a sideways price action.
However, no signs of trend reversal can be seen as of now. The trailing stoploss for the long positions should be kept at 47,400.
Q4FY24 earnings on Wednesday, May 22, 2024:
Sun Pharmaceutical Industries, Power Grid Corporation, Grasim Industries, Max Healthcare Institute, Torrent Power, FSN E-Commerce Ventures, Petronet LNG, New India Assurance, Jubilant Foodworks, Metro Brands, Gland Pharma, One 97 Communications, Sundram Fasteners, Ramco Cements, Gujarat Pipavav Port, Garden reach Shipbuilders, Minda Corp., Star Cement, HEG, Avanti Feeds, Indigo Paints, GMM Pfaudler, DB Corp., Teamlease Services, Ashoka Buildcon, PG Electroplast, and Kaveri Seeds are scheduled to report their March quarter results today, May 22.
