Trade Setup For May 10: Nifty To Test Further Lows As Weak Sentiment Persists

The benchmark indices might test lower support from current levels, given absence of any major positive trigger and the current weak market sentiment, according to market analysts.

On daily charts, the index has formed a long bearish candle, which supports further weakness from the current levels, according to Shrikant Chouhan, head of equity research, Kotak Securities Ltd.

"We are of the view that, the short-term market texture is weak but due to temporary oversold conditions, we could see one technical pullback rally from the current levels."

Nifty has broken below both the lower boundary of its upward channel and the support of the 50-day exponential moving average (DEMA) around the 22,150 level, according to Ajit Mishra, senior vice president, research, Religare Broking Ltd. The ongoing increase in the volatility index suggests that the current market sentiment may persist, potentially leading Nifty to test the 21,800-21,850 zone soon, he said.

With voter turnout ratio slightly lower than 2019 for the same seats (except Assam), investors have turned nervous about BJP’s expected seat count, said Siddhartha Khemka, head of retail research, Motilal Oswal Financial Services Ltd. He expects this volatility to continue in the near term in the absence of any major positive trigger, he said. "Now till Nifty holds below 22,000 zones, weakness could be seen towards 21,700."

The GIFT Nifty was trading 35 points or 0.16% higher at 22,163.50 as of 06:40 a.m.

Nifty May futures were down by 1.43% to 22,072.85 at a premium of 115.35 points, while its open interest was up by 20.14%. Nifty Bank May futures were down by 1.05% to 47,688 at a premium of 180.1 points, with its open interest up by 11.04%.

Open interest distribution for the Nifty May 16 series indicates that the 21,000 level is seeing the most put strikes, and call strikes of 23,000 have the maximum open interest.

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

Overseas investors in Indian equities remained net sellers on Thursday for the sixth consecutive session, as the sell-off hit a new high in nearly a month.

Foreign portfolio investors offloaded stocks worth Rs 6,994.9 crore—the highest since April 12. Domestic institutional investors remained net buyers for the 13th day and mopped up equities worth Rs 5,642.5 crore, according to provisional data from the National Stock Exchange.

India's benchmark stock indices recorded their worst fall since January, tracking declines in shares of heavyweights HDFC Bank Ltd., Larsen & Toubro Ltd., and Reliance Industries Ltd.

Market capitalisation of the Nifty Total Market, which tracks the performance of 750 stocks listed on the NSE, fell Rs 6.7 lakh crore in Thursday's crash, according to data on the NSE.

The NSE Nifty 50 ended 345 points, or 1.55% lower at 21,957.50, and the S&P BSE Sensex settled 1,062.22 points, or 1.45% lower at 72,404.17.

Nifty fell 1.66% to 21,932.40, and Sensex dropped 1.54% to 72,334.74 during the day.

The benchmark Nifty 50 also slipped below the 22,000 level for the first time in 14 sessions.

The broader markets underperformed; the S&P BSE MidCap closed down 2.01%, whereas S&P BSE SmallCap was 2.41% lower.

Nineteen of the 20 sectors on BSE declined. Only S&P BSE Auto ended higher.

The market breadth was skewed in the favour of sellers. About 2,902 stocks fell, 929 rose, while 112 remained unchanged on the BSE.

• One97 Communications Ltd.: Paytm has refuted media reports on its lending partners invoking loan guarantees due to repayment defaults. The company acts as a distributor of loans and does not provide a first-loss default guarantee or other loan guarantees to its lending partners.

• Brigade Enterprises Ltd.: The company will develop a residential project in Bengaluru, with a gross development value of Rs 660 crore.

• Adani Enterprises Ltd.: The company’s Mauritius-based arm, Adani Global, acquired a 49% stake in UAE-based Sirius Digitech for $24,500.

• Bharat Petroleum Corp (Standalone, QoQ)

  • Revenue up 1.62% at Rs 1.16 lakh crore versus Rs 1.15 lakh crore (Bloomberg estimate: Rs 1.21 lakh crore).

  • Ebitda up 47.97% at Rs 9,213 crore versus Rs 6,226 crore (Bloomberg estimate: Rs 8,766 crore).

  • Margin up 251 bps at 7.9% vs 5.39% (Bloomberg estimate: 7.3%).

  • Net profit up 24.34% at Rs 4,224 crore versus Rs 3,397 crore (Bloomberg estimate: Rs 5,342 crore).

  • Board recommended final dividend of Rs 21 per share.

  • Bonus issue in the ratio of 1:1.

  • Note: Exceptional expenses of Rs 1,798 crore.

Benchmarks in the Asia-Pacific region extended gains to the second day as higher-than-expected initial jobless claims in the US fuelled hopes the Federal Reserve will cut rates soon.

The Nikkei 225 was trading 654.92 points, or 1.72% higher at 38,728.90, and the S&P ASX 200 was trading 38.20 points, or 0.49% up at 7,759.80 as of 06:37 a.m.

Number of people filing for initial unemployment benefits in the US rose 22,000 to seasonally adjusted 2,31,000 in the week ended May 4, marking the highest level since last August. A Bloomberg survey forecasted 212,000 claims for the week.

The S&P 500 and Nasdaq Composite rose by 0.27% and 0.51%, respectively, as of 11:25 a.m. New York time. The Dow Jones Industrial Average rose by 0.85%.

Brent crude was trading 0.38% higher at $84.20 a barrel. Gold rose 0.16% to $2,350.11 an ounce.

• US Dollar Index at 105.25.

• US 10-year bond yield at 4.45%.

• Brent crude up 0.38% at $84.20 per barrel.

• Nymex crude up 0.48% at $79.64 per barrel.

• Bitcoin was up 0.30% at $62,820.41.

The Indian rupee closed flat against the US dollar on Thursday, ahead of the release of US weekly job data and a flat dollar index.

The local currency closed unchanged at Rs 83.51 against the greenback, according to Bloomberg data. The rupee had closed at the same amount on Wednesday.