Trade Setup For May 16: Nifty's Near-Term Consolidation Likely Amid Strong Global, Domestic Cues

Indian stocks are expected to consolidate in a broader range in the near term as the election progresses and the financial results season comes to an end, according to market analysts.

Relentless selling by foreign investors and the India VIX at elevated levels are putting pressure on the market, according to Siddhartha Khemka, head of retail research at Motilal Oswal Financial Services Ltd.

As long as the index remains below the 22,300 levels, it can consolidate in the range of 22,000–22,300, according to Hrishikesh Yedve, assistant vice president of technical and derivatives research at Asit C Mehta Investment Interrmediates Ltd. "If the index sustains above 22,310, then the pullback rally might extend to 22,500 levels."

The relative strength index stands at 46.6, indicating an uptick from oversold territory and signalling growing bullish momentum, according to Mandar Bhojane, research analyst at Choice Broking.

The US April consumer prices increased 0.3% month-on-month versus an estimate of 0.4% increase. The US April consumer prices rose 3.4% year-on-year in line with estimates.

India's merchandise trade deficit widened in April as a sequential decline in exports is outpacing the fall in imports. In absolute terms, the trade gap widened to $19.1 billion in April as compared with $15.6 billion.

The GIFT Nifty was trading 7.5 points or 0.03% higher at 22,380.00 as of 06:48 a.m.

The Nifty May futures were down 0.13% to 22,287.05 a premium of 86.5 points, and its open interest was down 4%. The Nifty Bank May futures were down by 0.38% to 47,908.55 at a premium of 221.1 points, while its open interest was higher by 4.47%.

The open interest distribution for the Nifty May 16 series indicates that the 22,000 level is seeing the most put strikes, and call strikes of 22,500 have the maximum open interest.

For the Bank Nifty options' May 15 expiry, the maximum call open interest was at 48,000 and the maximum put open interest was at 45,000.

Overseas investors stayed net sellers on Wednesday for the 10 straight session. Foreign portfolio investors offloaded stocks worth Rs 2,832.8 crore.

Domestic institutional investors stayed net buyers for the 17th consecutive session and mopped up equities worth Rs 3,788.4 crore, the NSE data showed.

Snapping a three-session winning streak, India's benchmark indices ended lower, weighed by losses in shares of heavyweights HDFC Bank Ltd. and Tata Motors Ltd.

The NSE Nifty 50 ended 17.30 points, or 0.08%, lower at 22,200.55, and the S&P BSE Sensex closed 117.58 points, or 0.16%, down at 72,987.03. Intraday, the Nifty rose 0.36% to 22,297.55, and the Sensex gained 0.27% to 73,301.47.

On the NSE, five sectors declined, five advanced, while two remained flat out of 12. The NSE Nifty FMCG index was the top loser among peers, and the NSE Nifty PSU Bank was the top gainer.

Broader markets outperformed the benchmark indices. The S&P BSE Midcap ended 0.60% higher, and the S&P BSE Smallcap settled 0.96% up.

On BSE, 16 sectors advanced, and four declined out of 20. The S&P BSE FMCG was the worst-performing sector. S&P BSE Capital goods gained the most.

• Infosys: The company and SAP Emarsys collaborated to deliver an enhanced personalised omnichannel experience for clients.

• Star Cement: The NCLT approved the amalgamation of three units with the arm Star Cement Meghalaya.

• Titagarh Rail Systems Q4 FY24 (Consolidated, YoY)

  • Revenue up 8% at Rs 1,052 crore vs Rs 974 crore (Bloomberg estimate Rs 1,122 crore).

  • Ebitda up 25.7% at Rs 120 crore vs Rs 95 crore (Bloomberg estimate Rs 123 crore).

  • Margin at 11.4% vs 9.8% (Bloomberg estimate 11%).

  • Net profit up 63.7% at Rs 79 crore vs Rs 48 crore (Bloomberg estimate Rs 78.4 crore).

• NLC India Q4 FY24 (Consolidated, YoY)

  • Revenue down 31% at Rs 3,541 crore vs Rs 5,134 crore.

  • Ebitda down 65% at Rs 602 crore vs Rs 1,722 crore.

  • Margin at 17% vs 33.5%.

  • Net profit down 86.4% at Rs 114 crore vs Rs 837 crore.

Asian markets rallied in early trade on Thursday, taking cues from its Wall Street peers on the latest US inflation data that reinforced bets for an easing monetary policy by the Federal Reserve.

The Nikkei 225 was 247.04 points or 0.64% higher at 38,632.77, and the S&P ASX 200 was 98.90 points or 1.28% higher at 7,852.60 as of 06:41 a.m. The Kospi index was 40.18 points or 1.47% up at 2,770.52.

On sequential basis, the US Consumer Price Index slowed to 0.3% in April, from 0.4% in the preceding month. The sequential figure is less than 0.4% analysts estimated in a Bloomberg's survey. US April consumer prices rose by 3.4% year-on-year in line with the Bloomberg estimate of 3.4%.

Wall Street traders sent stocks up and bond yields slumping as a slowdown in inflation reinforced bets that the Federal Reserve will be able to start cutting interest rates as early as September, reported Bloomberg.

The S&P 500 and the Nasdaq Composite rose 1.17% and 1.40%, respectively, as of Wednesday. The Dow Jones Industrial Average rose 0.88%.

• US Dollar Index at 104.20

• US 10-year bond yield at 4.32%

• Brent crude up 0.45% at $83.12 per barrel

• Nymex crude up 0.52% at $79.04 per barrel 

• Bitcoin was up 0.26% at $66,150.88

The Indian rupee ended flat against the US dollar on Tuesday, as traders awaited fresh cues from the US April inflation data.

The local currency ended little changed at Rs 83.50 versus Tuesday's close of Rs 83.51 against the US dollar, according to Bloomberg data.