NIFTY OUTLOOK & OPTION TRADING TIPS FOR 24 MAY 2024

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Overview

Indian benchmark indices surged to record highs on May 23, 2024, driven by strong performance in the banking and automotive sectors. The Sensex closed at 75,418, up 1,196 points (1.61%), while the Nifty ended at 22,967, up 369 points (1.64%).

Market Highlights

• Sensex: 75,418 (+1,196 points, +1.61%)
• Nifty: 22,967 (+369 points, +1.64%)
• Market Breadth: 1,577 shares advanced, 1,761 shares declined, 112 shares unchanged.

Sectoral Performance

1. Top Performing Sectors:

   • Automotive: Significant gains, leading the market rally.
   • Banking: Strong performance, contributing heavily to index gains.
   • IT: Positive momentum, supporting overall market growth.

2. Lagging Sectors:

   • Pharma: Slight underperformance, with some key stocks declining.
   • FMCG: Minor lag behind other sectors.

3. Sectoral Indices:

   • Auto, Bank, Capital Goods: Each up 2%.
   • Metal, Pharma: Slightly down, reflecting sector-specific challenges.

Key Drivers

• RBI Dividend Impact: The RBI's record dividend distribution is akin to an indirect rate cut, anticipated to lower bond yields and boost liquidity.
• HSBC PMI Data: Positive composite HSBC PMI data for May indicating strong economic expansion.
• Monsoon Onset: Early southwest monsoon onset provided optimism, particularly benefiting the agricultural sector.

Market Dynamics

• Nifty Performance: Reclaimed record highs, driven by substantial buying in heavyweight stocks. The index is nearing the significant 23,000 mark.
• Technical Indicators: Breakout from an Ascending Triangle Formation on the daily chart suggests a continuation of the uptrend with a target of 23,850. Immediate support is seen at the 22,780 level.
• Broader Market: Despite strong gains in benchmark indices, broader market indices (BSE Midcap and Smallcap) showed modest gains of 0.5% and 0.3% respectively.

Stock Performance

Top Gainers

1. Adani Enterprises
2. Adani Ports
3. Axis Bank
4. L&T
5. M&M

Top Losers

1. Sun Pharma
2. Power Grid Corp
3. Hindalco
4. Coal India
5. NTPC

Outlook

The prevailing positive trend is expected to continue, with banking sector alignment potentially adding further momentum. The target for Nifty is projected in the 23,100-23,400 zone, with support in the 22,600-22,800 range in case of any pullback. Investors are advised to focus on heavyweight stocks and remain selective with midcap and smallcap segments.

Conclusion

The Indian stock market witnessed a highly favorable trading session on May 23, 2024, driven by strong sectoral performances and positive economic indicators. With key indices setting new records, the market sentiment remains bullish, poised for further gains in the near term.