May 31st 2024 Stock Market analysis

Bulls Return as Markets Edge Up Ahead of 'Exit Poll'; Sensex and Nifty Close Slightly Higher

The market experienced extreme volatility on May 31, ahead of the GDP data announcement later today and the Lok Sabha general election 'Exit Poll' on June 1. At close, the Sensex rose by 75.71 points or 0.10 percent to 73,961.31, while the Nifty increased by 42 points or 0.19 percent to 22,530.70.

For the week, both the BSE Sensex and Nifty50 declined by nearly 2 percent each.

Despite mixed global cues, the market opened positively, with Nifty starting the June F&O series above 22,550. Although it experienced range-bound movement, it ended higher, breaking a five-day losing streak.

Top Nifty gainers included Adani Enterprises, Adani Ports, Shriram Finance, Coal India, and Tata Steel, while the losers were Divis Labs, Nestle India, LTIMindtree, Maruti Suzuki, and TCS. Sector-wise, metals, power, telecom, and realty rose by 1-2 percent, whereas media, FMCG, healthcare, and IT indices fell by 0.3-1 percent.

The BSE midcap index ended flat, while the smallcap index gained 0.8 percent.

Notably, 130 stocks reached their 52-week high on the BSE, including Blue Star, Coromandel International, Emami, Fortis Healthcare, GlaxoSmithKline Pharmaceuticals, Godawari Power, J Kumar Infra, Jindal Stainless, Jupiter Wagons, KNR Construction, Samvardhana Motherson International, and Oberoi Realty, among others.

Technical Outlook on 3rd June

The Nifty may find immediate support around 22,436, followed by 22,342, with resistances at 22,624 and then 22,718. Currently, Nifty is exhibiting a mixed trading pattern.

Similarly, Bank Nifty might encounter immediate support near 48,707 and then 48,431, with resistances at 49,260 and subsequently 49,536. At present, Bank Nifty is also displaying mixed trading signals.

Derivative Outlook on 3rd June

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

Open Interest Analysis: Nifty future MAY contract OI has increased with positive close which shows Long Buildup.

Cost of Carry Analysis: Nifty MAY month contract has ended in high compare with JUNE contract and flat range compare with previous session which indicates a mixed trade.

India VIX Analysis: India VIX has closed at 24.60 vs 24.18 (DoD) basis which shows increased in volatility.

Zomato Shares Plunge 5% Amid Macquarie's Warning of 50% Downside Due to Intense Competition

Zomato shares dropped over 5% on May 31 after foreign brokerage Macquarie predicted a nearly 50 percent decline in the food delivery platform's share price over the next 12 months due to heightened competition in the quick commerce sector.

At 11:33 AM, Zomato's shares were trading at Rs 173.80 apiece on the NSE.

The brokerage reaffirmed its "underperform" stance on Zomato, setting a price target of Rs 96, which suggests a potential downside of 46 percent from Thursday's closing price.

Macquarie has maintained its 'underperform' rating on Zomato since May last year, having downgraded it from its previous 'neutral' call. Notably, Macquarie's 'underperform' rating is equivalent to a 'sell' recommendation, making it one of only three brokerages advising investors to exit the stock.

Analysts at Macquarie cited increasing competitive pressure as the primary reason for their caution, particularly highlighting JioMart's plans to offer 30-minute grocery delivery in multiple cities starting next month, with further expansion planned. Reliance Industries-owned JioMart intends to launch 30-minute grocery services in eight cities initially and then expand to the top 20-30 cities nationwide during the first phase.