Bulls Regain Momentum Ahead of ‘Exit Poll’, Nifty Ends on Positive Note

At the close, the Nifty 50 was at 22,530.70 up by 0.19%

On May 31, the NSE Nifty 50 displayed resilience, opening on a positive note with a 0.19% gain and closing above the 22,500 mark. The day was marked by extreme volatility, driven by anticipation surrounding the GDP data announcement and the Lok Sabha general election ‘Exit Poll’ on June 1. Despite mixed global cues, the Nifty started the June F&O series above 22,550 and ended the day higher, snapping a five-day losing streak.

After five consecutive sessions of losses, Indian benchmark equity indices saw a positive start on Friday, buoyed by strong performance from leading financial stocks. However, the Nifty remained volatile within a narrow range as investors awaited election results. Notably, significant call writing at 23000 and put writing at 22500 suggests the Nifty may oscillate between these levels in the coming days.

With the pre-election trading strategy coming to a close, investor attention now turns to the release of exit polls for further market insights. Regional variations, lower voter turnout, and resistance at current levels prompt a cautious stance among investors. They are directing investments towards fundamentally strong sectors and stocks to mitigate potential market reactions.

Meanwhile, on the global front, the release of high inflation data from the US could impact global market sentiment in the short term. Despite these uncertainties, frontline indices closed higher on Friday, signaling optimism ahead of the Lok Sabha exit polls on Saturday, June 1.

The Nifty 50 demonstrated resilience amidst volatility, driven by anticipation of key domestic and global events. As investors brace for election outcomes and monitor global economic indicators, strategic investment in fundamentally sound sectors remains crucial to navigate market fluctuations effectively.

Bank Nifty: Up by 0.62%

The Bank Nifty and BSE Sensex both exhibited positive momentum on the trading day, with gains across the board. The Bank Nifty opened in the green, surging by 0.62% and closing at 48,983.95. Similarly, the BSE Sensex saw a modest rise of 0.10%, reaching a high of 73,961.31 at the close of trading.

In the sectorial front, the realty sector emerged as a frontrunner on the sectorial front, experiencing a notable gain of 2.34%. Within this sector, Macrotech Developers Ltd. showcased exceptional performance, recording a substantial increase of 5.75%, while Brigade Enterprises Ltd. also saw significant growth, gaining by 3.62%.

Conversely, the media sector experienced a downturn, emerging as the top loser with a decline of 1.39%. Within this sector, Tips Industries Ltd. faced a notable loss of -3.61%, while Sun TV Network Ltd. also saw a decrease of -2.27%.

Foreign Institutional Investors (FII/FPI) were active in the market, with a buy value of Rs. 95,467.56 crore and a sale value of Rs. 93,854.32 crore. This resulted in a net value of Rs. 1,613.24 crore. On the other hand, Domestic Institutional Investors (DII) also participated actively, with a buy value of Rs. 21,441.16 crore and a sale value of Rs. 19,326.99 crore, leading to a net value of Rs. 2,114.17 crore.

Bank Nifty

The Nifty Banking sector had some gainers and some losers for the day.

The gainers included Punjab National Bank with a 1.37% increase, Federal Bank with a 1.34% increase, IndusInd Bank with a 1.12% increase, Bank of Baroda with a 1.05% increase, and Bandhan Bank with a 0.99% increase.

On the other hand, the biggest losers in the sector included IDFC First Bank with a 1.16% decline, and Axis Bank with a 0.33% decline. These results suggest that most of the banking stocks performed better for the day.

Rupee Strengthens Amid Robust Domestic Sentiment

In early trade on Friday, the rupee appreciated by 5 paise, reaching 83.24 against the US dollar. This boost was supported by strong domestic equity markets and a downward trend in overseas crude oil prices. The local unit opened at 83.25 at the interbank foreign exchange market and soon strengthened further, marking a notable rise from its previous close of 83.29 on Thursday, where it had gained 11 paise.

Despite the positive sentiment, the rupee faced pressure from a strong American currency and ongoing foreign capital outflows. Market participants are closely watching domestic macroeconomic data due later in the day, which is expected to influence future movements. Additionally, the dollar index, which measures the greenback’s strength against a basket of six currencies, was up by 0.13% at 104.79, reflecting a robust US dollar.

The forward premia on dollar/rupee contracts fell over the past two weeks as expectations for a US Federal Reserve rate cut diminished. This decline in forward premia highlights the interest rate differential between the US and India. The forward point, which is the difference between the two countries’ interest rates, is added to or subtracted from the spot rate, resulting in either a forward premium or a forward discount.

The decline in Brent crude futures, the global oil benchmark, by 0.38% to $81.55 per barrel also played a role in supporting the rupee. Lower crude oil prices generally benefit the Indian economy, reducing import costs and positively influencing the currency’s value.

Overall, while the rupee’s recent appreciation is encouraging, it remains sensitive to global financial conditions, domestic economic indicators, and the movements in the US dollar and crude oil prices. Market participants will continue to monitor these factors closely to gauge the rupee’s future trajectory.

Stocks Highlights

Adani Enterprises Ltd. Shares Surge Amid Dividend Announcement
Adani Enterprises Ltd. experienced a significant share price increase, rising by 6.94% from its previous close of Rs 3,194.25 to a last traded price of Rs 3,416.00. The company recently announced a dividend of Rs 1.3 per share, set for 2 May 2024, with a record date of 14 June 2024. Despite this positive movement, the company faced a 28.87% decline in sales, marking its first revenue contraction in three years.

A bearish signal emerged with a 10-day moving average crossover, typically indicating an average price decline of -3.29% within 7 days, based on the past five years. However, over the last three years, Adani Enterprises Ltd. has delivered a substantial return of 142.67%, significantly outperforming the Nifty 100 index, which returned 48.53% in the same period.

Divi’s Laboratories Ltd. Faces Decline Amid Financial Shifts
Divi’s Laboratories Ltd. saw its share price decrease by -2.38%, from Rs 4,412.80 to Rs 4,307.65. Historically, only 1.46% of its trading sessions have experienced intraday declines exceeding 5%. The company has maintained a disciplined financial approach, spending less than 1% of its operating revenues on interest expenses and 13.95% on employee costs for the year ending 31 March 2024.

Divi’s Laboratories Ltd. reported a significant decrease in cash used for investing activities, amounting to Rs 269.0 crore, a 90.07% year-over-year reduction. Over the past three years, the stock has yielded a modest return of 5.22%, falling short compared to the Nifty 100’s 48.53% return.

While Adani Enterprises Ltd. shows strong long-term growth potential despite recent bearish signals, Divi’s Laboratories Ltd. reflects a more conservative financial management approach with lower returns. Investors should consider these factors when making informed decisions in the current market landscape.

Advance Decline Ratio

Today, the advance-decline ratio was 0.83, and the market breadth was negative. The volatility index India Vix increased by 1.76 to settle at 24.60 and the FIIs were net buyers today.

DAILY MARKET ACTION
Advancers – 1166
Decliners – 1406
52Wk High – 54
52Wk Low – 61
High Band Hitters – 94
Low Band Hitters – 101
200d SMA – 21050
50d SMA – 22387
20d SMA – 22476

Top Gainers and Losers Stocks

The top gainers were Adani Enterprises (+6.94%), Adani Ports (+4.01%), Shriram Finance (+3.57%), Coal India (+2.04%), and Tata Steel (+2.01%).

The top losers were Divi’s Laboratories (-2.38%), Nestle India (-2.08%), LTIM (-1.64%), Dr. Reddy (-1.56%), and Maruti (-1.37%).

Top Gainers and Losers Sectors

The top gainers sector were Realty (+2.34%), Metal (+1.87%), Oil & Gas (+0.74%), Consumer Durables (+0.63%), and Financial Services (+0.56%).

The top losers sector were Media (-1.39%), IT (-1.28%), Pharma (-0.92%), FMCG (-0.32%), and Auto (-0.22%).

SECTORS – NOTABLE ACTION
REALTY +2.34%
METAL +1.87%
OIL & GAS +0.74%
MEDIA -1.39%
IT -1.28%
PHARMA -0.92%

Stocks Ban List

None of the stocks listed by SEBI for the F&O ban are included in the ban list.

A stock enters the Ban List if its MWPL is above 95%. Implying that, Ban List shows the Futures and Options (FnO) stocks whose combined open interest in all FnO contracts for a given period crosses 95% of Market-Wide Position Limit.

ZEEL stock has the possibilities of entrance in the ban list.

Daily Pivots

As per the above pivots data, 22350 to 22750 is the Nifty 50 trading range.

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This article is only for educational purposes and is not an investment advice.