Trade Setup For May 6: Nifty To See Cautious Trade On Weak Technicals
Indian stock indices are likely to open weak on Monday taking cues from lower Gift Nifty and a weak technical views on both daily and weekly timeframes.
Benchmark indices will exhibit weakness on Monday, as indicated by technical views in both daily and weekly timeframes, according to market analysts.
Nifty on a weekly scale has formed a doji candle, and on a daily scale, it has formed a bearish engulfing candle near the all-time high, indicating weakness, said Hrishikesh Yedve, assistant vice president of Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates Ltd.
Both timeframes indicate a trend reversal in the Nifty with a negative divergence in the RSI, according to Aditya Gaggar, director at Progressive Shares. "We believe that the index is likely to oscillate in the range of 22,160–22,770."
The Bank Nifty has formed a shooting star candlestick pattern near the all-time high, indicating strong resistance near 49,975, Yedve said. A sustained move below 48,342 could lead to further weakness in the index, he said.
Traders are advised to exercise caution, keeping an eye on geopolitical events, Shrey Jain, founder and chief executive at SAS Online said. Nifty may trade within a certain range, but staying above 22,200 points is crucial for a positive market outlook, he said.
GIFT Nifty was trading 7 points, or 0.03%, lower at 22,686.00 as of 6:39 a.m.
F&O Action
Nifty May futures were down by 0.98% to 22,575.2 at a premium of 99.35 points, with their interest down by 5.4%. The Nifty Bank May futures were down 0.68% to 49,094.75 at a premium of 171.2 points, while the open interest was 8.67% lower.
Open interest distribution for the Nifty May series indicates that 22,500–22,700 levels are seeing the most put strikes, and call strikes of 22,500 have the maximum open interest.
During the previous session, open interest at 22,500 saw the most decline in put strikes, and call strikes at 22,500 saw the maximum open interest change.
For the Bank Nifty options May expiry series, the maximum call open interest was 49,500, and the maximum put open interest was 47,000.
Open Interest Distribution
Open Interest Change
FII/DII Activity
Overseas investors remained net sellers of Indian equities for the second consecutive session on Friday.
Foreign portfolio investors offloaded stocks worth Rs 2,392 crore and domestic institutional investors remained net buyers for the eighth day, mopping up equities worth Rs 690.5 crore, according to provisional data from the National Stock Exchange.
Markets On Friday
India's benchmark stock indices reversed early gains to end lower on Friday on profit booking and caution ahead of US non-farm payroll data.
Heavyweights Reliance Industries Ltd., Larsen & Toubro Ltd., and HDFC Bank Ltd. dragged the indices lower, limiting the weekly gains in both the NSE Nifty 50 and S&P BSE Sensex.
The Nifty 50 ended 172.35 points, or 0.76%, lower at 22,475.85, and the Sensex fell 732.96 points, or 0.98%, to close at 73,878.15.
On a weekly basis, the benchmarks extended gains for the second week, with the NSE Nifty 50 ending 0.25% higher and the S&P BSE Sensex closing 0.20% in the week ended on May 3.
Broader markets performed better than their larger peers. The S&P BSE Midcap ended 0.52% lower, and the S&P BSE Smallcap settled 0.21% lower.
On BSE, 19 sectors out of 20 declined; only S&P BSE Healthcare rose. S&P BSE Telecommunication declined the most.
Major Stocks In News
HDFC Bank: The RBI has approved the re-appointment of Atanu Chakraborty as part-time chairman for 3 years, effective May 5.
Dr Reddy’s: The company announced the launch of Doxycycline capsules in the US.
Vodafone Idea: The company to focus on expanding 4G in 17 priority circles to improve competitiveness.
Britannia Industries (Consolidated, YoY)
Revenue up 1.14% at Rs 4,069 crore. (Bloomberg estimate: Rs 4,109 crore).
Ebitda down 1.67% at Rs 787 crore. (Bloomberg estimate: Rs 782 crore).
Margin down 55 bps at 19.35%. (Bloomberg estimate: 19%).
Net profit down 3.76% at Rs 537 crore. (Bloomberg estimate: Rs 542 crore).
Recommended final dividend of Rs 73.5 per share.
Tata Technologies (Consolidated, QoQ)
Revenue up 0.89% to Rs 1,301 crore. (Bloomberg estimate: Rs 1,287 crore).'
EBIT up 0.76% at Rs 211 crore. (Bloomberg estimate: Rs 213.4 crore).
Margin down 2 bps to 16.21%. (Bloomberg estimate: 16.5%).
Net profit down 7.62% to Rs 157 crore. (Bloomberg estimate: Rs 177 crore).
Board recommended a final dividend of Rs 8.4 per share and a special dividend of Rs 1.65 per share.
Global Cues
Benchmarks in Australia rose in early trade on Monday, taking cues from positive gains on Wall Street and an improved risk appetite following softer-than-expected US jobs data. Financial markets in Japan and South Korea are closed today.
The S&P ASX 200 was trading 40.50 points, or 0.53%, higher at 7,669.50 as of 06:38 a.m.
Wall Street took a slowdown in the US jobs market as an indication that the Federal Reserve will be able to start cutting rates as early as September, with traders sending stocks up sharply as bond yields fell, Bloomberg said.
The S&P 500 index and Nasdaq Composite rose by 1.26% and 1.99%, respectively, as of Friday. The Dow Jones Industrial Average gained by 1.18%.
Brent crude was trading 0.02% lower at $82.94 a barrel. Gold rose 0.10% to $2,304.13 an ounce.
Rupee Update
The Indian rupee closed stronger on Friday amid weakness in the US Dollar Index and a decline in the prices of crude oil.
The local currency appreciated three paise to close at Rs 83.43 against the greenback. It had closed at Rs 83.46 on Thursday, according to Bloomberg data.
