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Overview
Indian benchmark indices ended in the red for the fourth consecutive session on May 29, 2024. The Nifty 50 closed at 22,704, down 183 points while the Sensex fell by 667 points finishing at 74,502 Despite broader indices performing relatively better, the market witnessed significant pressure across most sectors, particularly in banking, financials, and IT.
Key Indices Performance
- Nifty 50: 22,704 (-0.80%)
- Sensex: 74,502 (-0.89%)
- BSE Midcap Index: -0.4%
- BSE Smallcap Index: +0.2%
Market Sentiment
Bears dominated the market, leading to a sharp decline in the Nifty. Heavy call writing was observed at the 23,000 and 22,800 strikes, while put writing was significant at the 22,800 and 22,700 strikes. This option data indicates a likely expiry around 22,800 for Nifty. However, a dip below 22,700 could trigger additional selling pressure. Immediate resistance is positioned at 22,800.
Bank Nifty
The Bank Nifty index showed a clear negative sentiment, opening below its support level at 49,000 and closing near its 21-day EMA at 48,400. A failure to sustain above this level could drive the index down to 48,000. Therefore, 48,400 now serves as the support level, with 49,000 as the resistance.
Sectoral Performance
- Top Losers: Banking, Financials, IT
- Top Performers: Pharma, Metal
Despite the overall market decline, the broader indices (midcap and smallcap) performed relatively better, finishing nearly flat to slightly negative. Selling pressure was more pronounced in index stocks, whereas mid and smallcap segments managed to hold their recovery, outperforming the frontline index.
Sectoral Indices
- Capital Goods, Telecom, Healthcare, Metal, Power: Ended in the green
- Auto, Bank, FMCG, IT, Oil & Gas, Realty: Declined by 0.3-1%
Market Breadth
- Advancing Shares: 1473
- Declining Shares: 1871
- Unchanged Shares: 90
Notable Movements
Biggest Nifty Losers
- HDFC Life
- SBI Life Insurance
- ICICI Bank
- Tata Consumer Products
- Tech Mahindra
Biggest Nifty Gainers
- Hindalco
- Power Grid Corp
- Divis Labs
- Nestle
- Sun Pharma
Technical Analysis
On the daily chart, Nifty breached its immediate support at 22,780. Considering the monthly expiry day tomorrow, a short covering move might lift the index above the 22,780 level. However, the market remains cautious, especially with the approach of the May derivatives contracts expiry, which is likely to maintain high volatility.
Global Cues
Weak global cues and profit-taking ahead of the US core PCE data, a critical gauge of inflation, contributed to the bearish sentiment. Rising global inflation, particularly in Japan and Australia, has dampened investor expectations of a near-term US Federal Reserve rate cut. This has resulted in broad-based weakness across sectors, with financials and IT facing significant underperformance.
Conclusion
The recent market decline signals caution among investors. Nifty might find support around the 22,550 level, corresponding to the 20-day EMA. We recommend limiting aggressive long positions and adopting a hedged approach given the anticipated volatility.
As markets continue to adjust to global economic indicators and domestic pressures, monitoring key support and resistance levels, along with sector-specific performances, will be crucial for navigating the current market environment.
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