Coalition Government raises policy uncertainty concerns : Daily Market Update -5 June 2024 | Globe Capital Market LTD.
05-Jun-2024
Coalition Government raises policy uncertainty concerns : Daily Market Update -5 June 2024

The Narendra Modi-led National Democratic Alliance returned to power for the third consecutive term, but the Bharatiya Janata Party failed to cross the simple majority on its own.  

Overview and Outlook

Global Stock Market Today

  • US equity markets settled on a flat to positive note.
  • European equity markets settled lower in range 0.37% to 1%.
  • Asian equity markets are trading mix.
  • GIFT Nifty is up by 100 points, Nifty futures likely to open around 22050 levels (as on 8:20AM).

 

News highlights from across the globe

  • Stocks in the Asia-Pacific region are trading mix following higher closure of Wall Street counterparts on renewed expectations of rate cuts by the Federal Reserve due to a cooling US labour market.
  • The bond market gained ground as indications of a cooling labour market fuelled speculation that the Federal Reserve might implement rate cuts this year, as reported by Bloomberg. US 10-year yields continued a four-day decline, reaching almost 30 basis points.
  • Brent crude traded 0.10% lower at $77.44 a barrel.

 

Important news updates from the domestic front

  • Hindalco Industries: US subsidiary Novelis said early on Wednesday that it plans to postpone its $945 million initial public offering, citing ‘market conditions’.
  • Wipro announced that it has partnered with Zscaler to introduce Wipro Cyber X-Ray, an AI-assisted decision support platform.
  • Hindustan Aeronautics: The Sukhoi 30 MKI aircraft crashed today while on a test sortie from the company’s Nashik Division. Both pilots have been ejected safely; a technical snag was reported by the pilots.
  • Tata Motors incorporated the wholly owned unit TML Commercial Vehicles as part of the proposed demerger.
  • NLC India will consider raising a foreign currency loan of up to $600 million on June 10.
  • Shilpa Medicare’s wholly owned subsidiary filed its first drug master file of recombinant human albumin 20% with the USFDA.
  • Jindal Stainless acquired a 100% stake in Evergreat International Investment.
  • Container Corp signed a MoU with Shipping Corp. to provide end-to-end logistics solutions.

 

Nifty Overview & Outlook

Election vote counting day proved to be a harrowing experience for the Indian stock markets, particularly for the benchmark index Nifty. The session started off weak, swiftly erasing gains from the previous day and washing off the entire positive momentum built up in the latter half of May 2024. Nifty registered a historic single-day loss of nearly 6%, while Bank Nifty plunged almost 8%, primarily dragged down by PSU Banks.

The broader market indices also witnessed significant downturns, with the Midcap and Smallcap indices reporting losses of 8% and 5% respectively. Sector-wise, four sectors – PSU Banks, Energy, Metal, and Infra – suffered double-digit losses, declining by approximately 11-15% each. Barring FMCG index which closed in green gaining nearly 1%, all other indices closed in red.

Following the Hanging Man formation at its peak, Nifty began the day on a negative note, with the Open and High prices being the same. The index engulfed the entire rally of the latter half of May 2024. Although Nifty dipped below the 21800 mark, it managed to close above it. Consequently, in case of a rebound from current levels, we hold 22070 and 22310 as resistance levels. On the downside, immediate support levels are anticipated at 21775 followed by 21530.

 

Derivatives Overview & Outlook

Yesterday, short buildup was seen in Nifty, Banknifty and Finnifty futures with increase in open interest by 3.4%, 11.7 and 61% respectively, whereas long unwinding was seen in Midcap Nifty futures with decrease in open interest by 6.4%.

Majority of sectoral indices settled lower. Amongst them, Technology, Automobile, Infrastructure ,Banking, Power and Metals stocks witnessed long unwinding.

On options front, call writing was seen at multiple strikes and maximum positions are at 21000 PE and 24700 CE closely followed by 24000 CE.

 

Institutional Trading Activity

Yesterday, FIIs sold stocks worth Rs 12,436 Cr in the cash segment, bought stocks futures worth Rs 225 Cr and sold index future worth Rs 9843 Cr. DIIs too were net seller in the cash segment to the tune of Rs 3319 Cr.

 

Nifty Futures, Banknifty Futures and Finnifty Key Levels

Nifty – Resistances 22150-22300; Supports 21850-21800

Banknifty – Resistances 52000-52300; Supports 50300-50000

Finnifty – Resistances 21400-21800; Supports 20500-20300

 

F&O Securities in Ban Today – ZEEL

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