May 6th 2024 Stock Market analysis

State-run banks weigh on India's blue-chip Nifty 50 index

India's benchmark indices, the Sensex and Nifty, opened nearly 0.5 % higher but ended the session flat due to selling pressure in PSU stocks. The Sensex closed marginally up by 17.39 points or 0.02 % at 73,895.54, while the Nifty slipped 33.15 points or 0.15 % to settle at 22,442.70. Gainers included Kotak Mahindra Bank, soaring over five percent, followed by Tata Consultancy Services and Hindustan Unilever, which gained 2.1 % and 1.8 %, respectively. However, Titan Co Ltd experienced its steepest decline in 22 months, falling over 7.2 % due to weak Q4 earnings. SBI also faced a setback, losing 2.9 %, alongside NTPC, which lost 2.31 %. The Nifty Realty index surged 2.76 %, while the Nifty PSU Bank index plummeted 3.66 %, with consumer durables and oil & gas sectors losing 2.55 % and 1.75 %, respectively. Shares of REC, PFC, and IREDA plunged by up to 11 %, primarily due to the Reserve Bank of India's draft guidelines on project financing, proposing a 5 percent general provision on all existing and new project loans during the construction phase. These guidelines, applicable to both banks and non-bank lenders, notably affect REC and PFC, key agencies financing power sector projects, reversing most of their gains from the previous week when both hit record highs on strong Q4 earnings.

‍Technical Outlook on 7th May

Nifty is poised to find immediate support levels near 22356 and 22270, with resistance anticipated at 22532 and 22618. Currently, it appears to be gearing up for a recovery rally from lower levels. Similarly, Bank Nifty is expected to encounter immediate support around 48641 and 48387, while resistance is likely at 49129 and 49363. However, profit booking seems to be looming at higher levels for Bank Nifty.

Derivative Outlook on 7th 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 increased with negative close which shows Short Buildup.

Cost of Carry Analysis: Nifty MAY month contract has ended in high compare with JUNE contract and high range compare with previous session which indicates a recover from lower levels.

India VIX Analysis: India VIX has closed at 16.60 vs 14.62 (DoD) basis which shows increase in volatility.

Shakti Pumps Rockets: Hits 5% Upper Circuit for 5th Consecutive Day, Surging 28% in a Week

Following its impressive January-March quarter (Q4FY24) performance, shares of Shakti Pumps surged to an all-time high of Rs 2,285 per share on May 6th, marking a remarkable 28% increase since the announcement of its Q4 results, while also being locked at a five percent upper circuit for the fifth consecutive day. 

Shakti Pumps stands out as a premier manufacturer of solar stainless-steel submersible pumps, pressure booster pumps, controllers, inverters, and a range of other products. Distinguishing itself, it is the sole company to produce all the essential components for solar pump installations in-house, encompassing drives, structures, motors, and inverters.

The small-cap company's stock has surged by an impressive 124 percent year-to-date, surpassing the three percent increase in the benchmark Nifty 50 index over the same period. In Q4FY24, the company witnessed a remarkable rise in profit-after-tax (PAT), soaring over 40x to Rs 89.7 crore from Rs 2.2 crore in the previous year. Additionally, revenue experienced a substantial YoY increase of 233 percent to Rs 600 crore, while the EBITDA margin expanded by 1,550 basis points to reach 21.5 percent in Q4FY24. Looking ahead, under the PM-KUSUM scheme, it is estimated that over 35 lakh solar pumps will be installed by FY28, presenting a significant market opportunity with an estimated value of Rs 1.05 lakh crore, considering the average installation cost of around Rs 3 lakh per solar pump.