Positive vibes continue to push the market higher as trends begin to show some promise. However, Q4 results have been a mixed bag. As investors remain confused we need to tread these higher levels with caution.
Stock market on 5 May
The stock market hit its highest closing level of the year on 5 May, helped by strong foreign investments and a boost in confidence owing to falling crude oil prices.
The Sensex closed 295 points (0.4%) higher at 80,797, while the Nifty 50 advanced 114.45 points (0.47%) to 24,461. The BSE Midcap index jumped 1.45%, and the BSE Smallcap index rose 1.23%.
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Investor optimism has remained solid, with benchmark indices recording gains in 12 of the past 16 sessions. Both Sensex and Nifty 50 have climbed over 10% during this period, driven by strong foreign buying. Data from NSDL shows that FIIs have injected more than ₹38,300 crore into equities over the past 11 trading days.
Meanwhile, Brent crude dropped below $60 a barrel, marking a 20% decline since the start of the year. This eases economic pressures, particularly as export growth faces hurdles due to uncertainties surrounding trade tariffs.
Outlook for trading
Moving to the charts, we note that the trends have been largely oriented towards trading rather than investing. Hence, from a trading perspective we can note that on the hourly charts the cloud support area around 24,180 combined with the trendline support has helped prices revive. The gradual rise we witnessed last week is now facing challenges to increase further from Monday.
The emerging trend clearly suggests the rally seen last week was holding the resistance zone and the gap up opening ensured that prices traded above the range area that developed in the past few days. Hence, one should track the trends that are in progress as a move above 25,000 (Nifty Spot) is needed to renew the bullish bias. Momentum on the hourly chart indicates that the market seems to have witnessed a resumption of selling pressure after prices settled down. A gradual is rise emerging from lower levels, but we can expect it to remain hesitant.
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To undertake shorts, we need to see Nifty move below 24,350 for it to drop to 24,200 and 24,050 once again. As per open interest data, 22,200 is where we see the next set of supports emerging. If we witness a 30-minute range breakdown on Tuesday we can consider trading on either side as the trends still remain tentative and we expect some resistance to kick in. As a ranging market is in play, we need to be quick in profit-taking as the trend does not have sufficient steam to move strongly in either direction.
Options data suggests that PCR has moved to 0.81, highlighting that the trends are facing some pressure at higher levels. Steady call writing at 24,500 levels remains a hurdle for the market’s recovery.
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At this juncture we must pay attention to multiple news triggers, global tariff threats, cautious investor sentiment, and domestic economic challenges that contributed to the sharp market decline and volatility in the rupee.
Three stocks to trade, recommended by NeoTrader’s Raja Venkatraman
Nippon Life India Asset Management Ltd (Cmp 653.20)
Buy above ₹655 and on dips to ₹639, stop ₹629, target ₹705-720
- Why it’s recommended: It remains one of the favorites among brokerage houses and has received a rerating for a buy. With bullish signals emerging, a long opportunity can be considered.
- Key metrics:
- P/E: 31.90
- 52-week high: ₹816.25
- Volume: 325.02k
- Technical analysis: Support at ₹620, resistance at ₹800
- Risk factors: Market volatility and sector-wide fluctuations in asset management performance could impact returns
- Buy at: CMP and dips to ₹639
- Target price: ₹705-720 in one month
- Stop loss: ₹629
Calcutta Electric Supply Corporation Cmp 164.97)
Buy CMP and on dips to ₹158, stop ₹155, target ₹178-184
- Why it’s recommended: The stock has shown signs of a recovery despite profits declining, with revenue growth and positive management commentary generating demand. After testing key support levels, renewed buying interest and a favorable technical setup, a long opportunity can be considered.
- Key metrics:
- P/E: 15.66
- 52-week high: ₹213
- Volume: 4.09M
- Technical analysis: Support at ₹145, resistance at ₹185
- Risk factors: Market fluctuations, regulatory changes, and sector-specific challenges in the power distribution industry
- Buy at: CMP and dips to ₹158
- Target price: ₹178-184 in 1 month
- Stop loss: ₹155
JK Tyre & Industries Ltd (Cmp 320.70)
Buy above ₹322 and on dips to ₹305, stop ₹295, target ₹330-345
- Why it’s recommended: JK Tyre is a well-established brand with a reputation for producing high-quality, durable tyres. The company has launched initiatives to expand into the rural areas with a focus on strengthening its last-mile distribution network. Also the charts show the formation of a double bottom and the possibility of a subsequent upward drive.
- Key metrics:
- P/E: 13.5
- 52-week high: ₹511
- Volume: 955.46k
- Technical analysis: Support at ₹243, resistance at ₹395
- Risk factors: Market volatility and fluctuations in raw material costs could impact profitability
- Buy at: CMP and dips to ₹305
- Target price: ₹330-345 in one month
- Stop loss: ₹295
Raja Venkatraman is co-founder, NeoTrader. His Sebi-registered research analyst registration no. is INH000016223.
Investments in securities are subject to market risks. Read all the related documents carefully before investing. Registration granted by Sebi and certification from NISM in no way guarantees performance of the intermediary or provide any assurance of returns to investors.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.
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