June 5th 2024 Stock Market analysis

Nifty Overcomes Election Jitters, Returns to Pre-Exit Poll Levels Driven by Banks and Autos

On June 5, the Sensex and Nifty closed 3.2 % higher, driven by value buying after both benchmarks fell nearly 6 % in the previous session. Gains in the Nifty were led by banks, automobiles, and FMCG stocks. The Sensex rose by 2,303 points to 74,382, and the Nifty 50 climbed 689 points to 22,573. Approximately 2,321 shares advanced, 1,031 shares declined, and 76 shares remained unchanged. The previous day's decline of nearly 6 percent was attributed to the BJP-led NDA coalition narrowly winning the 2024 national elections. All 13 sectoral indices gained today, with Nifty Bank, Nifty Auto, and Nifty FMCG each advancing by over 4 percent.

Excluding Bharat Petroleum and L&T, the remaining 48 companies in the Nifty 50 index posted gains. HDFC Bank, ICICI Bank, and RIL led the surge in Nifty. The volatility gauge India VIX fell by 29 percent to 19, after rising to 30 on June 4.

Market experts anticipate continued volatility and choppiness until there is clarity on the cabinet and key portfolios. However, market participants remain optimistic about the long-term potential of the Indian market.

Technical Outlook on 6th June

The Nifty index is expected to find immediate support around 22,401, with further support at 22,182. Resistance levels are anticipated at 22,839 and 23,058. Currently, the Nifty is experiencing high volatility in the market.

Similarly, the Bank Nifty index is expected to find immediate support around 48,325, with further support at 47,596. Resistance levels are anticipated at 49,783 and 50,051. The Bank Nifty is also encountering high volatility in the market.

Derivative Outlook on 6th June

PCR Analysis: Nifty PCR-OI has increased with nifty has positive which shows PUT WRITING.

Open Interest Analysis: Nifty future June contract OI has decreased with positive close which shows Short Covering.

Cost of Carry Analysis: Nifty June month contract has ended in low compare with July contract and negative range compared with previous session which indicates an initially negative bias then recovery.

India VIX Analysis: India VIX has closed at 18.89 vs 26.75 (DoD) basis which shows decreased in volatility.

‍Tata Motors Stock Soars 3% on Strong JLR Sales in May

Tata Motors shares have slipped 8 % in the past month, a sharp contrast to their performance as the best-performing stock on the Nifty in 2023. On June 5, Tata Motors shares rose 3 percent to ₹928 apiece following strong May sales from its British subsidiary Jaguar Land Rover (JLR). JLR's sales increased by 29 percent year-on-year, reaching 6,093 units compared to 4,732 units in May last year. The stock pared some gains after hitting an intraday high of ₹934.

In Q4, JLR continued its strong financial performance with record-breaking revenue of 7.9 billion pounds, an 11 percent increase compared to Q4 FY23 and a 6 percent rise from Q3 FY24. For FY24, JLR's revenue reached 29 billion pounds, a 27 percent increase from the prior year.

Tata Motors, India's largest four-wheeler electric vehicle manufacturer, posted a staggering 222 percent growth in consolidated net profit, reaching ₹17,407.18 crore. This compares to ₹5,407.79 crore in the same period last year. However, the company anticipates a sluggish start to FY25, citing an expected dip in local passenger vehicle demand amidst ongoing elections, though it expects the premium luxury segment to remain resilient.

Following the results, Nomura downgraded the stock to 'neutral' from 'buy,' citing potential demand risks for JLR. The brokerage also noted that while passenger vehicles (PVs) are expected to grow ahead of the industry, commercial vehicle (CV) growth may moderate.

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