Trade Setup: Market Holds Steady; Nifty To Open Around 22,000; Inflation Data & Global Cues In Focus

The Indian stock market experienced a volatile week, leaving investors on edge. After a five-day downward spiral that saw the Nifty shedding nearly 700 points, on Friday the indices managed to eke out modest gains.

While the relief of not witnessing further declines provided some solace, it was not enough to instigate a full-fledged relief rally. The Nifty, however, clung tenaciously to the crucial 22,000 mark, a psychological threshold that it has steadfastly maintained on a weekly basis since February.

Friday's trading session, though marked by a positive undertone, fell short of signalling a definitive trend reversal. The Nifty encountered resistance at 22,150, failing to breach this level and closing 80 points shy of the day's peak.

On the global front, optimism prevailed as Wall Street celebrated its eighth consecutive day of gains, culminating in its best week of 2024. Yet, the buoyancy in international markets failed to fully translate to Indian equities, which grappled with a host of internal uncertainties.

Election-related apprehensions, persistent foreign institutional investor (FII) outflows, and pockets of exuberance within certain segments of the market continued to weigh heavily on investor sentiment, contributing to heightened volatility. India's Volatility Index mirrored this unease, nearing levels not seen since October 2022.

Foreign investors remained net sellers in the cash market, offloading over Rs 21,000 crore (approximately $2.3 billion) worth of equities throughout the week. Conversely, domestic institutions maintained their position as net buyers, providing a semblance of stability amidst the turbulence.

While the Nifty exhibited signs of resilience with a modest rebound, the banking sector bore the brunt of the downturn. The Nifty Bank index, plagued by a 3% decline for the week, languished below the critical 47,500 mark. Despite optimistic projections from brokerages foreseeing State Bank of India shares reaching Rs 1,000 within the next 12 months, the stock registered declines on Friday.

In the derivatives segment, Nifty 50 May futures witnessed a reduction in Open Interest by 3.7%, accompanied by a shift in premium levels. Conversely, Nifty Bank's May futures saw a marginal decline in Open Interest. The Put-Call Ratio for Nifty 50 stood at 0.91, reflecting a marginal uptick from previous levels.

Hindustan Copper entered the F&O ban list, while Aditya Birla Fashion and Piramal Enterprises exited the ban. Looking ahead to the May 16 expiry, Open Interest additions were observed on both the Call and Put sides within the 22,000 to 22,500 and 22,000 to 22,100 strike ranges, respectively.

As the stock market gears up for another trading week, investors are eyeing several key players whose recent financial performances and strategic moves could influence market dynamics. Here's a rundown of the stocks to watch out for ahead of Monday's session:

Tata Motors: The automotive giant reported a significant boost in net profit, buoyed by a tax credit of Rs 8,159 crore. Despite a 14.3% rise in revenue, margins slightly missed expectations. The company remains on track to achieve net debt-free status by fiscal year 2025.

Eicher Motors: While posting a strong year-on-year profit growth of 31.6%, Eicher Motors' net profit fell slightly short of street expectations. Revenue and EBITDA, however, were in line with estimates, with margins expanding by 270 basis points.

ABB India: ABB India witnessed robust revenue growth of 28%, surpassing estimates. With a nearly doubled net profit and impressive margin expansion, driven by strong growth across various segments, the company's performance signals a promising outlook.

Piramal Pharma: Piramal Pharma showcased revenue growth and margin expansion, led by its CDMO business and India Consumer Healthcare segment. The company's efforts in operational efficiency and cost optimization contributed to a significant reduction in net debt.

Bank of Baroda: With healthy deposit and loan growth, the Bank of Baroda reported improved net interest income and profit figures. Notably, its asset quality improved, marking the lowest gross NPA in at least nine years.

Bank of India: Despite strong loan growth, Bank of India faced a surge in slippages, resulting in elevated credit costs. Nevertheless, improvements in asset quality and reduced NPA levels bode well for the bank's resilience amid challenging conditions.

VIP Industries: VIP Industries witnessed double-digit revenue growth, albeit with a net loss attributed to exceptional items. Challenges such as reduced business share from Bangladesh impacted gross margins.

Aarti Industries: Aarti Industries' performance fell slightly below expectations in terms of net profit and revenue. However, margin expansion and in-line EBITDA suggest underlying strength despite the marginal miss.

Thermax: Thermax reported robust revenue and profit growth, accompanied by improved margins. With a healthy order book and strong order inflows, the company appears well-positioned for sustained growth.

JK Cement: JK Cement's revenue and EBITDA surged, although higher costs and lower volumes posed challenges. Despite these headwinds, ongoing expansion projects signal long-term growth prospects.

APL Apollo Tubes: APL Apollo Tubes faced a dip in net profit and EBITDA, despite revenue growth. Margin contraction suggests challenges in cost management amid evolving market dynamics.

JSW Steel: JSW Steel's production figures were impacted by iron ore availability constraints, reflecting challenges in the supply chain.

Zydus Lifesciences: Zydus Lifesciences received US FDA approval for Dexamethasone tablets, enhancing its product portfolio and market potential.

As the new trading week looms ahead, global stock futures held steady on Sunday, signalling a cautious start for Wall Street amidst anticipation of fresh inflation data.

US stock futures showed muted movements, with S&P 500 futures edging down by 0.1%, while Nasdaq 100 futures remained near the flatline. Dow Jones Industrial Average futures slipped by 0.09%. Despite a strong performance last week, marked by the Dow's eighth consecutive winning session and its best week of the year.

Investors are awaiting April's consumer price index (CPI) report of the US, scheduled for release on Wednesday. The CPI print will offer insights into inflation trends, shaping expectations around the Federal Reserve's monetary policy trajectory. Amidst persistent concerns over inflationary pressures, traders hope for indications that the Fed will maintain its accommodative stance, despite recent spikes in inflation.

European markets closed higher on Friday, riding on positive momentum. The pan-European Stoxx 600 index climbed by 0.8%, with mining stocks and utilities leading gains. Major bourses, including Germany's Dax, France's CAC 40, and the U.K.'s FTSE 100, notched fresh record highs.

Oil prices witnessed a dip on Friday, with Brent crude futures settling down by 1.3% at $82.79 a barrel, while US West Texas Intermediate crude shed 1.26% to $78.26 a barrel. Comments from US central bank officials hinting at prolonged higher interest rates fueled concerns about dampened demand from major crude consumers, contributing to the downward pressure on oil prices.

In Asia-Pacific markets on Monday, stocks faced downward pressure as investors digested China's April inflation data. While China's consumer price index exceeded expectations with a 0.3% year-on-year increase, the producer price index fell more than anticipated by 2.5% year-on-year. Japan's Nikkei 225 and Topix indices both declined by 0.39%, while South Korea's Kospi and Kosdaq indices fell by 0.20% and 1.05% respectively. Australia's S&P/ASX 200 lost 0.12%, while Hong Kong's Hang Seng index and mainland China's CSI 300 index dropped by 0.52% and 0.7% respectively.

In the domestic market, GIFT Nifty was seen trading with a discount of nearly 50 points from Nifty Futures' Friday close, indicating a start in the Red for the Indian market.

As markets brace for potential volatility in response to the upcoming inflation data, investors remain cautious amid mixed global cues. The trajectory of inflation and its implications for monetary policy decisions will likely drive market sentiment in the days ahead, as traders assess the balance between economic recovery and inflationary pressures.