On Friday, the 30-share BSE Sensex closed at 73,878.15 level, down 732.96 points, or 0.98%. The NSE Nifty 50 ended at 22,475.85, down 172.35 points, or 0.76%.
Analysts said that sentiment, fundamentals, and overbought technical situations were in conflict. Excessive optimism, overbought technical conditions, and the revelation that FIIs were net sellers of ₹2,116 crores last week were the three negative catalysts that gave rise to the bears’ emergence in Friday’s trade amid massive profit booking.
Nifty 50 bulls could stay strong against a background of six favourable triggers, according to Prashanth Tapse, Research Analyst and Senior Vice President of Research at Mehta Equities. These include Federal Reserve Chairman Jerome Powell’s dovish stance on interest rates. (Powell restored hope that the Fed will be able to lower interest rates this year); In the meantime, the Fed’s expectations for a rate cut have been pushed back from November to September due to a weaker-than-expected April jobs report; WTI oil prices have dropped 6.5% to a seven-week low of $78.30 per barrel; and record-high GST revenue.
Gross Goods and Services Tax collections hit a new high of ₹2.10 lakh crore in April 2024. This indicates a noteworthy annual growth of 12.4%, mostly due to a robust rise in both domestic transactions (up 13.4%) and imports (up 8.3%); Finally, at the pre-election rally, investors expressed hope or expectation that the existing government will continue in the general elections; the India Meteorological Department has forecast the heaviest rainfall in over 20 years.
Market Outlook by Dharmesh Shah, Vice President, ICICI Securities
• The index recorded a fresh all-time high of 22,794 and underwent profit booking in Friday’s session. The weekly price action formed a bear candle with a long upper shadow, highlighting profit booking near 22,800 amid elevated volatility ahead of the election.
• In the coming week, we expect Nifty 50 to undergo higher base formation above 22,000, which would set the stage to challenge 22,800 and accelerate upward momentum towards our earmarked target of 23,400 by June. In the process, bouts of volatility ahead of the general election phase cannot be ruled out amidst the Q4 earning season. Thus, utilising dips to accumulate quality stocks would be the prudent strategy to adopt. Our constructive bias is validated by the following observations:
• A) Contrary to the adage of sell in May and go away, Indian equities have delivered positive returns in May during general election years in four out of the past five instances since CY1999. Minimum returns were 1.5%, while the average was 14%.
• B) Brent prices have given breakdown from five month rising channel indicating that upsides are capped around $92. Further declines towards 75–78 are likely in the coming month.
• C) The broader market remains strong, led by mid- and small-caps strong performance in April as both indices recorded fresh all-time highs. Large FII selling also being absorbed by DII flows, limiting downsides.
Bank Nifty Outlook:
• The Bank Nifty index has given a breakout from the 3 ½ month consolidation, indicating an acceleration of the up move. On the relative front, Bank Nifty is expected to outperform Nifty 50. We expect the bank Nifty to form a higher base above 48,000 and gradually pave the way to challenge the psychological mark of 50,000.
Top Stock Recommendations:
Buy State Bank of India (SBI) in the range of ₹810–832 for the target of ₹890 with a stop loss of ₹745.
Buy Power Grid Corporation of India Ltd in the range of ₹305–313 for the target of ₹338 with a stop loss of ₹299.
Disclaimer: The Research Analyst or his relatives or I-Sec do not have actual/beneficial ownership of 1% or more securities of the subject company, at the end of 03/05/2024 (preceding date) or have no other financial interest and do not have any material conflict of interest.
The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it’s all here, just a click away! Login Now!
Download The Mint News App to get Daily Market Updates.
Published: 05 May 2024, 12:35 PM IST