May 3rd 2024 Stock Market analysis

Profit Booking Drags Indian Equities to End Lower on Friday

In today's volatile session, the Indian markets struggled to maintain their initial gains, ultimately closing lower with the Nifty slipping below 22,500. Heavy selling pressure was observed across sectors, except for the metal sector. The Sensex concluded the day down by 732.96 points or 0.98 % at 73,878.15, while the Nifty was down by 172.35 points or 0.76 % at 22,475.80. Advanced shares numbered 1,241, while 2,013 shares declined, and 79 remained unchanged.

Initially opening on a positive note, the market witnessed a sudden downturn erasing all early gains, remaining in negative territory for the remainder of the session. Throughout the week, both the BSE Sensex and Nifty50 reported flat returns.

Key Nifty losers included L&T, Maruti Suzuki, Reliance Industries, Nestle India, and Bharti Airtel, whereas gainers comprised Coal India, Grasim Industries, ONGC, Dr. Reddy's Laboratories, and Hindalco Industries. With the exception of the metal sector, all other sectoral indices closed in the red, with capital goods, realty, telecom, and PSU Bank declining by one percent each, while oil & gas, auto, Information Technology, and Media slipped by 0.5 percent each.

The broader indices also faced downward pressure after touching fresh highs early in the session, with the BSE midcap index declining by 0.2 percent and the smallcap index by 0.5 percent. Notable volume spikes of more than 500 percent were observed in Torrent Power, Cummins, and Bajaj Finance.

Technical Outlook on 6th May

Nifty is likely to find immediate support levels around 22,253 and 22,031, with resistances at 22,586 and 22,697. Currently, profit booking seems imminent for Nifty, particularly at higher levels.

For Bank Nifty, immediate support levels are anticipated near 48,449 and 47,975, while resistances are at 49,397 and 49,871. Profit booking appears to be on the horizon for Bank Nifty, particularly as it maintains higher levels.

Derivative Outlook on 6th May

PCR Analysis: Nifty PCR-OI has decreased with nifty has negative which shows CALL WRITING.

Open Interest Analysis: Nifty future MAY contract OI has decreased with negative close which shows Long Unwinding.

Cost of Carry Analysis: Nifty MAY month contract has ended in low compare with JUNE contract and low range compare with previous session which indicates a negative bias.

India VIX Analysis: India VIX has closed at 14.62 vs 13.45 (DoD) basis which shows increase in volatility.

‍Kotak Bank Q4 Preview: Strong Loan Growth Boosts Net Interest Income, but Profit May Be Affected by Shrinking Margins

Analysts anticipate that strong loan growth will likely drive Kotak Mahindra Bank to achieve a double-digit increase in net interest income for Q4 FY24. However, the bank may face challenges with higher cost of funds and shrinking margins, potentially impacting its net profit. The private sector lender is scheduled to announce its Q4 results on May 4. Recently, the bank gained attention following the Reserve Bank of India's decision to restrict the issuance of new credit cards, citing inefficiencies and non-compliance. Additionally, the sudden resignation of senior leader KVS Manian has raised concerns among investors regarding the bank's talent pool stability. Despite a 18 percent decline in Kotak Bank shares this year, significantly underperforming the four percent rise in the benchmark Nifty 50 index during the same period, analysts predict a ten percent year-on-year increase in the bank's NII to Rs 6,690 crore in Q4FY24, attributed to robust credit offtake. However, they project a six percent YoY decline in the bank's profit to Rs 3,283 crore for Q4FY24, down from Rs 3,496 crore in the previous year.