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Pre-market update for Indian stock market Thursday, May 30, 2024: Following yesterday’s sharp fall, the S&P BSE Sensex and the NSE Nifty 50 indices are likely to start today’s trading session on a jittery note, as global cues remain weak.
Even as the S&P Global Ratings augurs well for the Indian stock market, the monthly F&O expiry may weigh on the market sentiment on Thursday.
At 07:00 AM, Gift Nifty futures quoted around 22,645, indicating a likely gap-down of over 50-odd points on the Nifty 50 index.
On Wednesday, the Sensex and the Nifty tumbled 670 points and 183 points, respectively, on concerns over the timing of an interest rate cut in the US.
Weak global cues prompted investors to take profits ahead of the US core PCE data. Continued soaring of global inflation, like latest trend in Japan and Australia is diminishing investor expectation of a US Fed rate cut in the near term, said Vinod Nair, head of research at Geojit Financial Services in a note.
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S&P Global upgrades India
The S&P Global Ratings on Wednesday raised its outlook for India to ‘positive’ from ‘stable’ while affirming the lowest investment grade sovereign credit rating (BBB-) ahead of the general election results due on June 4.
While revising its outlook, S&P said that regardless of the election outcome, broad continuity in economic reforms and fiscal policies was expected. READ MORE
The ratings agency also revised its outlook on six Indian banks, including SBI, HDFC Bank, ICICI Bank, Axis Bank, Kotak Mahindra Bank and Indian Bank from ‘stable’ to ‘positive’.
Fund flow action
Foreign institutional investors (FIIs) were net sellers of stocks worth Rs 5,841.84 crore on Wednesday, whereas; domestic institutional investors net bought shares to the tune of Rs 5,233.79 crore.
FIIs selling now topped the Rs 40,000 crore mark in May, the highest in any month since January 2023.
However, in the derivatives segment, FIIs long-short ratio stands at near about 1, long index futures at 49.50 per cent, NSE data shows.
Global mood
Overnight, the US market ended in red, with Dow Jones down 1 per cent, Nasdaq slipping 0.6 per cent and the S&P 500 down 0.7 per cent following a spike in US Treasury yields.
The 5-year Treasury yield jumped to a 4-week high, after a government debt auction failed, reflecting worries that the Federal Reserve may keep rates higher for longer. The 10-year yield quoted above the 4.5 per cent.
Among commodities, Gold futures eased to $2,340 levels, while Brent Crude Oil prices consolidated around $83.50 levels.
Markets, in the Asia-Pacific region, were also in a sea of red this morning. Japan’s Nikkei tumbled over 2 per cent. The Australian benchmark indices shed 0.5 per cent, while Kospi was down 0.8 per cent.
Concern for FPIs as Sebi revises SOPs for custodians
Certain foreign portfolio investors (FPIs), which operate as pooled investment vehicles (PIVs), may not be exempt from the additional disclosure mandates by the Securities and Exchange Board of India (Sebi) following an update in the standard operating procedures (SOPs) for custodians.
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F&O expiry cues
The Nifty PCR (Put Call Ratio) basis on the May series options data stands at 0.64; indicating presence of higher open interest (OI) in Calls versus Puts. The higher OI in Calls stands at 23,500 and 23,000 Strike Prices, with significant Call writing seen at 22,800 and 22,900 Calls on Wednesday.
On the other hand, highest OI among Puts is seen at 22,000 and 22,500. Notable Put writing yesterday was visible at 22,300 and 22,350 Puts.
Trading strategy for Thursday, May 30 - Should you be a buyer or seller today? Here’s what market experts recommend:
Rupak De, Senior Technical Analyst, LKP Securities
The Nifty option data suggests that the NSE benchmark might expire around 22,800 on Thursday. On the other hand, a fall below 22,700 might trigger additional selling pressure in the market. Immediate resistance is placed at 22,800.
Ashwin Ramani, Derivatives & Technical Analyst, SAMCO Securities
Strong call writing (Bear activity) was also observed at the 22,800 Strike in Nifty. The maximum call open interest is placed at the 23,000 Strike while the maximum put open interest is placed at the 22,500 Strike. An uptrend is unlikely to resume unless 23,000 level is taken out successfully.
All Strikes on the Bank Nifty from 49,000 until 49,500 saw put writers (Bulls) exit and rise in call writing. Strong call writing was observed at the 48,500 Strike. The bears have an upper hand over the bulls at the 48,500 Strike and the option activity at this strike will provide cues about Bank Nifty’s upcoming direction.
Om Mehra, Technical Analyst, SAMCO Securities
The formation of a bearish candle for the Nifty formed on the daily chart is highlighting weakness, while the hourly chart also depicts a downtrend. The Nifty is below the crucial 22,800, which has now turned into resistance and now the new support remains between 22,650 and 22,600 going ahead.
The bearish candle with a long tail indicates rejections in reaching the 49,000 level in Bank Nifty. The index is hovering near the 20 DMA (Daily Moving Average) and if it falls below 48,380, it could potentially push towards the 48,000 mark. Resistance is currently expected around the 49,000 level.
In the broader context, a double-top formation is seen on the daily chart, which generally indicates a reversal signal of bullish trend.
Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates
Technically, the Nifty confirmed a dark cloud cover candlestick pattern and witnessed profit booking. On the downside, the 21-DEMA is placed near 22,567 and the 34-DEMA is placed near 22,480. Thus, 22,567 and 22,480 will serve as support points for the index, while 22,800 and 23,110 will act as a major hurdle in the short term.
Osho Krishan, Sr. Analyst - Technical & Derivative Research, Angel One.
The Nifty has breached the neckline of the recent breakout and is now heading towards the mean of the 'Rising channel' at 22,600, followed by the 20-day EMA at 22,500, which is to be considered as the crucial support level. On the higher end, the bearish gap of 22,825-22,860 is to be seen as an intermediate hurdle, while the sturdy wall stays at the 23,000-mark.
Stocks in focus
Awfis Space Solutions: To debut on the bourses today. Grey Market Premium suggests a listing gain in the range of 20-30 per cent for the stock.
Tata Steel: Stock to react to Q4 results. The steel major, post market hours yesterday, reported a 64.1 per cent year-on-year (YoY) drop in consolidated net profit at Rs 611.48 crore in Q4FY24 on lower steel realisation and restructuring cost relating to UK. Consolidated revenue from operations declined by 6.8 per cent YoY to Rs 58,687.31 crore.
Apollo Hospitals, Bharat Dynamics, Gateway Distriparks, Gujarat Alkalies, Marksans Pharma, PC Jeweller, Rajesh Exports and Take Solutions among the last lot of companies scheduled to announce March quarter results today.
