Trade Setup: Market Braces For Union Budget 2024; Nifty To Cross 25,000 Today? What Trends Suggest!

Monday's trading session provided a rollercoaster ride for investors as the Nifty remained largely unchanged, caught in the cross-currents of its major constituents, HDFC Bank and Reliance Industries. This seesaw action set the stage for an anticipated Union Budget presentation by Finance Minister Nirmala Sitharaman, scheduled for Tuesday. Let's dive into the details of Monday's market movements, the key factors at play, and what to expect on the budget day.

The Nifty's lack of direction on Monday was primarily due to the opposing movements of two of its largest constituents, HDFC Bank and Reliance Industries. HDFC Bank's shares surged by 2.2%, contributing over 60 points to the Nifty's gains. This rally was in response to the bank's robust quarterly results, highlighting its strong financial performance and market position.

In contrast, Reliance Industries faced a significant downturn, with its shares plummeting 3.5% following its Q1 results. This decline shaved off 82 points from the Nifty, effectively neutralizing the positive impact of HDFC Bank. The market's mixed reaction to these heavyweights resulted in the Nifty ending the day almost unchanged, defending the crucial 24,500 mark after briefly dipping to 24,350.

Several other key players influenced Monday's market dynamics. Kotak Mahindra Bank, ITC, and SBI added pressure on the Nifty, while M&M, Infosys, and NTPC provided much-needed support. Notably, Wipro emerged as the stock of the day, experiencing its largest single-day drop in 11 years. After its ADR fell 11.5% on Friday, Wipro's shares declined by 9% on Monday.

Broader market indices outperformed their benchmark counterparts, with the Midcap Index rising over 1% and the Smallcap index gaining 0.9%. This recovery came after several days of losses, indicating a positive sentiment among investors in the broader market.

The spotlight now shifts to the Union Budget presentation. Investors are watching for any changes in tax slabs, the Securities Transaction Tax (STT), or the Long-term Capital Gains Tax. Budget-specific themes showed movement on the eve of the presentation, with fertilizer stocks like FACT, RCF, and Chambal gaining between 6% and 10%. Defence PSUs and shipbuilders such as Mazagon Dock, Cochin Shipyard, and Garden Reach also saw gains of up to 5%.

Tuesday's session will see several stocks reacting to their quarterly results. Notable mentions include:

Federal Bank: The Reserve Bank of India has approved the appointment of Krishnan Venkat Subramanian as Managing Director and CEO of Federal Bank, effective from September 22, 2024. Subramanian previously served as Joint MD of Kotak Mahindra Bank until April 30, 2024.

Cyient DLM: The company's net profit surged 98.1% to Rs 10.5 crore, with revenue increasing 18.7% to Rs 257.8 crore. EBITDA remained flat at Rs 19.9 crore, resulting in an EBITDA margin of 7.7%, down from 9.2% last year. Cyient DLM added four new global clients during the quarter, with large deals in the pipeline at an advanced stage. The order book stood at Rs 2,126 crore, with the Defence segment growing 79.6% year-on-year and the Aerospace segment increasing by 78.1%.

Suzlon: Suzlon reported a tripling of its net profit to ₹302 crore, with revenue rising nearly 50% year-on-year to Rs 2,016 crore. EBITDA nearly doubled to Rs 354 crore, resulting in an EBITDA margin of 17.5%. The company's Wind Turbine Generator business saw its highest first-quarter deliveries in seven years, totalling 274 MW.

Power Mech Projects: The base gross value for the tender awarded for the construction of the Government Medical College & Hospital for Uttarakhand Pey Jal Nigam (UKPJNL) has been revised higher to Rs 594 crore from Rs 362 crore, due to a change in the scope of work.

Gensol Engineering: Gensol emerged as the winning bidder for 116 MW (150 MWp) of solar projects in Gujarat, with an approximate EPC revenue of Rs 600 crore. These projects will be distributed across 27 locations under Paschim Gujarat Vij Co., the state electricity distribution company, and are expected to be operational within 12 months of the Letter of Award issuance.

Greenlam Industries: The company reported a net revenue increase of 17.4% year-on-year to Rs 604.7 crore. Its overall laminate business grew by 13.2% in value terms and 11.9% in volume terms. However, EBITDA remained flat at Rs 64 crore, and net profit fell 39.7% to Rs 19.9 crore due to higher interest costs and depreciation for newer projects. International business was impacted by delayed container availability, longer shipment times, and increased freight costs. Domestic growth was also affected by a harsh summer and general elections, with net debt standing at Rs 921.8 crore.

MRPL: Revenue from operations rose to Rs 27,289 crore from Rs 24,825 crore last year, with exports increasing to Rs 7,564 crore from Rs 6,907 crore. However, EBITDA fell to Rs 650 crore from Rs 2,120 crore, with throughput at 4.35 MMT compared to 4.36 MMT last year. Net profit dropped to Rs 66 crore from Rs 1,013 crore.

Jana Small Finance Bank: The bank's net profit increased 90% from last year to Rs 171 crore, with net interest income rising 32% to Rs 610 crore. Gross NPA stood at 2.62%, up from 2.11% in March, while net NPA was at 0.99%, up from 0.56%.

Can Fin Homes: SBI Life Insurance acquired 10 lakh shares of Can Fin Homes, representing 0.75% of the total equity, at Rs 827.94 per share.

Foreign institutions remained net buyers in the cash market on Monday, while domestic institutions continued to book profits. The Nifty Bank index, despite early losses, managed to end in the green, aided by gains in HDFC Bank. However, it still closed below the critical 52,500 mark, indicating persistent upside resistance.

Global Market Overview
S&P 500 futures remained near flat on Monday night, with traders preparing for earnings reports from major companies following the benchmark's best day in over a month. Futures tied to the broad index hovered around their flatline, with Dow Jones Industrial Average futures adding just 1 point and Nasdaq 100 futures slipping 0.1%.

This comes after a strong day on Wall Street, where technology stocks rebounded from last week's sell-off. The S&P 500 rose more than 1%, marking its best session since early June, while the Dow ticked up by 0.3%. The tech-heavy Nasdaq Composite outperformed with a 1.6% climb, driven by gains in the information technology and communication services sectors, which advanced roughly 2% and 1.2%, respectively.

Treasury yields also saw slight increases, with the 10-year Treasury up about 2 basis points to 4.26%, the 2-year yield up more than 1 basis point to 4.52%, and the 30-year yield rising nearly 3 basis points to over 4.47%.

In Europe, stocks closed higher on Monday as global markets reacted to the news that US President Joe Biden had withdrawn from the presidential race. The pan-European Stoxx 600 index rose 1%, with travel and leisure and retail stocks the only sectors in negative territory, down 2.33% and 0.03%, respectively.

Oil prices continued to decline for a third session on Tuesday as investors focused on the prospects of increasing oil supplies and weak demand, showing little reaction to US political developments. Brent crude futures for September fell 9 cents to $82.31 a barrel, while US West Texas Intermediate crude for September dropped 10 cents to $78.30 per barrel.

Asia-Pacific markets showed mixed performance on Tuesday after Wall Street's overnight gains. Australia's S&P/ASX 200 edged up 0.61%, Japan's Nikkei 225 increased by 0.41%, and the broad-based Topix advanced 0.49%. South Korea's Kospi rose 0.58%, and the smallcap Kosdaq climbed 0.42%.

The South Korean producer price index in June rose 2.5% year-on-year, up from a 2.3% rise in May. Shares of the popular messaging app Kakao fell 4.63% after an arrest warrant was reportedly issued for founder Brian Kim over market manipulation allegations. In contrast, Hong Kong's Hang Seng Index dipped 0.23%, and Mainland China's CSI 300 fell 0.52%.

Meanwhile, the GIFT Nifty was trading at a premium of more than 15 points over the Nifty Futures' Monday close, indicating a flat-to-positive start for the Indian market.