Closing Bell: Nifty ends at 18,200, Sensex up 298 pts; IT stocks outshine, pharma drags

Taking Stock: Market gains on late buying; Sensex up 298 points, Nifty above 18,200

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Nifty formed a hammer pattern on the daily chart, indicating a potential trend reversal. It found support at the 21EMA, resulting in a smart recovery from the day's low.

Positive divergence was observed on the hourly RSI, suggesting a possible shift in momentum. Resistance on the higher end, is seen at 18300, while support is placed at 18050.

Positive global cues helped markets reverse its 3-day losing streak, as buying in IT, select banking & realty stocks aided recovery. If the global situation over interest rate movement and demand scenario doesn’t improve, we may see bouts of profit taking in the near term.

The Nifty witnessed a volatile day today. It opened on a positive note and slipped in to the red during the first half of the trading session. On the downside the 20-day moving average placed at 18,108 acted as a support and the Nifty witnessed strong buying interest which helped it to close in the green after falling for three consecutive days.

The positive divergence on the hourly momentum indicator indicated loss of momentum on the downside which in turn helped the upmove. Thus, both price and momentum indicator suggest that there could be further upmove over the next few trading sessions.

In terms of levels, 18,300 – 18,350 is the immediate hurdle zone while 18,100 – 18,050 shall act as a crucial support zone. Overall, we still believe that the Nifty is in a consolidation mode and the range of consolidation is likely to be 18,000 – 18,400.

Bandhan Bank has posted a 57.5 percent fall in its Q4 net profit at Rs 808.3 crore versus Rs 1,902 crore and net interest income was down 2.7 percentat Rs 2,471.8 crore versus Rs 2,540.2 crore, YoY.

Nifty remained sideways for the most part of the day. The index, however, recovered during the last hour of trade to close with gains of 76 points at 18207 levels. IT, Realty, and Auto were top gainers today while Pharma and FMCG were laggards. The broader market came under pressure and ended flat.

On the global front, investors cheered the possibility of a quick outcome of the U.S. debt ceiling negotiation. After struggling throughout the week, Nifty managed to show some strength in the last trading session.

While the market saw some profit booking at higher levels, the overall strength is visible and dips are being bought into. Positive global cues, a healthy result season, and consistent FII buying have been providing support to the market. We expect the market to resume its upward journey after taking a pause this week.

The domestic market, though experienced a lack of decisive direction, closed the day on a positive note. The optimism in the US market was fuelled by progress in debt ceiling talks and stronger-than-expected jobless claims. However, the prospect of a stronger US economy suggests that the Federal Reserve may keep policy rates elevated for an extended duration.

The domestic equity market has been quite buoyant, despite dampeners from abroad in the form of the accelerating fear of recession and the forecasts of slower global economic growth. The US debt limit discussions are also considered important for the US and the markets in general.

There is a renewed interest by overseas investors in the local market. This has lent some support to the markets. While the US developments would still have some influence on the markets, it may only short- term volatility.

In the immediate term the market may trade sideways waiting for fresh economic data both domestic and US-centric.

Indian rupee ended marginally lower at 82.66 per dollar against previous close of 82.59.

Indian benchmark indices ended higher in the highly volatile session on May 19.

At close, the Sensex was up 297.94 points or 0.48 percentat 61,729.68, and the Nifty was up 73.40 points or 0.40percentat 18,203.40. About 1,587 shares advanced, 1,759 declined, and 139 were unchanged.

Top gainers on the Nifty included Adani Ports, Adani Enterprises, Tata Motors, Tech Mahindra and Infosys, while losers were Divis Laboratories, Britannia Industries, Tata Consumer Products, NTPC and ONGC.

Among sectors, the Information Technology index up 1.4 percent, and auto, bank and realty were up 0.5 percent each. However, the pharma index shed 1 percent.

The BSE midcap and smallcap indices underperformed and ended on a flat note.

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Indian Rupee fell to a two-month low on overnight surge in the US Dollar and positive crude oil prices. However, late recovery in domestic equities and FII inflows prevented sharp fall in Rupee.

US Dollar gained amid optimism over debt ceiling talks and favourable data from US. US weekly jobless claims, continuing claims and Philadelphia Fed business outlook topped forecasts. Hawkish statements from US Federal Reserve officials also supported the greenback. There are rising odds that Fed may continue to hike interest rates in its June FOMC meeting to tame inflation.

We expect Rupee to trade with a negative bias on strong Dollar. Optimism over debt ceiling deal and hawkish fedspeak may continue to support the US Dollar. However, rise in risk appetite in global markets and inflows from foreign investors may support Rupee at lower levels. Investors may watch out for Fed Chair Jerome Powell’s speech. We expect USDINR spot to trade in between 82.30 to 83.30 in the near term.

-Buy rating, target at Rs 730 per share
-Weaker gross margin leads to EBITDA miss in Q4
-Strong order wins in switch/light/LMT segments, premiumisation & EV revenue ramping up
-Should continue to outperform industry volume growth
-Trades at 31x FY25 EPS estimates

UNO Minda was quoting at Rs 533.00, down Rs 28.80, or 5.13 percent.