Trade Setup: Market Hovers In A Range, Nifty Holds Steady Amid Elections, Q4 Results, Macro Data In Focus

The Nifty index marked its fifth consecutive day of gains on Wednesday, inching closer to the level of 22,600. Sustaining above this level could pave the way for new highs, adding to the cautious optimism among investors. Although the gains have been modest, the index has consistently made higher highs over the last seven trading sessions.

The Nifty's upward movement has been characterized by steady, incremental gains rather than dramatic surges. This measured advance comes as the market anticipates the outcome of the Lok Sabha elections, maintaining a "wait and watch" stance. The lack of significant volatility has been mirrored by a decline in the India VIX, which dropped on Wednesday but still remains above the 21 mark, indicating that investors are not entirely free from concerns.

Thursday is set to be important for the Nifty 50, with the weekly options expiry for the May Futures & Options (F&O) series. The recent uptick in the Nifty has turned the index positive for the series, albeit marginally. This positive shift, though slight, is a welcome change and could influence trading strategies and sentiment going forward.

A flurry of quarterly results reported after market hours on Wednesday is expected to impact Thursday's trading session. Key stocks such as Gland Pharma, Jubilant Foodworks, Grasim, Garden Reach Shipbuilders, Power Grid, Metro Brands, and Minda Corp will likely see significant movement. Investors will also be closely watching Nifty heavyweight ITC, which is scheduled to report its earnings, along with other notable companies including Barbeque Nation, Cello World, Finolex Cables, Fortis Healthcare, Honasa Consumer, Schneider Electric, Orchid Pharma, Tega Industries, Steel Strips Wheels, and TD Power.

Wednesday saw minimal institutional participation, with foreign investors (FIIs) remaining net sellers, though in smaller quantities. Domestic investors slightly outpaced FIIs, maintaining a balance in market dynamics. Despite the Nifty's upward trajectory, the Nifty Bank index has struggled, closing at the crucial 50-DMA level of 47,777. Major banks like ICICI Bank, SBI, and Axis Bank were the primary underperformers, dragging down the banking index.

The F&O market has provided some key insights into investor sentiment and potential market direction. Nifty 50's May futures saw a reduction of 1.2% in Open Interest, trading at a premium of 60.15 points, down from 76.85 points. In contrast, Nifty Bank's May futures experienced a more substantial decline of 6% in Open Interest. The Put-Call Ratio for Nifty 50 has increased to 1.2 from 1.15, reflecting a slightly bullish stance among traders.

Several stocks have entered or exited the F&O ban, affecting trading strategies. Hindustan Copper and Metropolis have been added to the ban list, while GMR Airports and Granules India have been removed. Other stocks like Aditya Birla Capital, Balrampur Chini, Bandhan Bank, Biocon, Vodafone Idea, India Cements, Piramal Enterprises, Zee Entertainment, IEX, NALCO, and PNB continue to remain under the ban.

For the May 23 expiry, Open Interest activity indicates some strategic positioning. On the Call side, strikes between 22,600 and 22,750 have seen additions, while the 22,500 strikes witnessed shedding. On the Put side, strikes between 22,500 and 22,650 have garnered added interest, suggesting traders are hedging their positions around these levels.

As the Nifty edges closer to the 22,600 mark, market participants are poised for potential new highs, contingent on the index's ability to sustain its current levels. The upcoming Lok Sabha election results loom large, likely to influence market sentiment and direction significantly. Investors will also watch the performance of key stocks reporting their quarterly results, which could provide further momentum or pose challenges to the market's upward trajectory.

As the trading week progresses, investors are closely monitoring a series of crucial earnings reports and market developments that could influence Thursday's session. Several key stocks have reported their quarterly results, offering insights into their performance and future prospects. Here's a detailed look at the standout performers and those facing challenges.

Grasim Industries: Grasim Industries reported a 15.5% increase in net profit, reaching Rs 2,721.8 crore. The company's revenue grew by 12.7% to Rs 37,727.1 crore, while EBITDA surged 24% to Rs 5,769.1 crore. The EBITDA margin improved to 15.1% from 13.9% last year. The building materials and financial services segments performed exceptionally well, offsetting the impact of softer export prices due to global overcapacity and cheaper imports affecting the domestic market. Notably, Grasim's chemicals business achieved its highest-ever caustic soda sales volume despite a 13% drop in revenue due to lower realizations.

Power Grid: Power Grid Corporation saw a slight decline in its financial metrics, with revenue down 2.5% to Rs 11,050 crore and EBITDA falling by 9.3% to Rs 9,142 crore. The EBITDA margin decreased to 82.7% from 88.9%, and net profit dipped by 2.1% to Rs 4,127.8 crore. The company's transmission revenue also declined by 3.7%, reflecting the ongoing challenges in the sector.

Jubilant Foodworks: Jubilant Foodworks posted a net profit of Rs 207.2 crore, significantly boosted by an exceptional gain of Rs 170.1 crore. Revenue, EBITDA, and margins all exceeded market expectations. The company reported an EBITDA margin of 19.7%, consistent with the previous year. Domino's Like-For-Like growth turned positive at 0.1% after four consecutive quarters of decline, indicating a potential turnaround.

Nykaa: Nykaa reported a net profit of Rs 9.8 crore, up from Rs 1.9 crore last year, with revenue increasing by 28.1% to Rs 1,667.9 crore. EBITDA grew by 32% to Rs 93.2 crore, with the EBITDA margin slightly improving to 5.6%. The company's consolidated GMV rose by 32% to Rs 3,217 crore, and its Beauty business crossed the $1 billion GMV milestone. Nykaa's physical retail footprint expanded to 187 stores across 68 cities, and its Fashion GMV saw a 27% year-on-year growth.

Gland Pharma: Gland Pharma's net profit surged to Rs 192.4 crore from Rs 78.7 crore last year, with revenue nearly doubling to Rs 1,537.5 crore. The company's EBITDA increased to Rs 358.5 crore from Rs 168.4 crore, with the EBITDA margin improving to 23.3%. Gland Pharma's board recommended its first-ever post-listing dividend of Rs 20 per share. The US business revenue increased by 83%, and other core markets grew by 58%, although India revenue declined by 19%.

Torrent Power: Torrent Power reported a 7.6% decline in net profit to Rs 447 crore, despite an 8.1% increase in revenue to Rs 6,528.6 crore. EBITDA rose by 1.7% to Rs 1,109 crore, with the EBITDA margin slightly decreasing to 17%. The company's profitability was supported by increased contributions from merchant power sales, renewable energy, and thermal generation. Torrent Power also ventured into the pump storage hydro segment, securing four sites in India.

New India Assurance: New India Assurance saw its net earned premium rise by 13.5% to Rs 8,975 crore, with gross premium written up 2% to Rs 10,572 crore. The company turned an operating profit of Rs 6 crore from a loss of Rs 68 crore last year. However, underwriting losses increased by 13% to Rs 1,886 crore, and the solvency ratio slightly declined to 1.81. Health premiums grew by 7%, while motor and fire premiums saw declines.

PG Electroplast: PG Electroplast reported a 30% increase in revenue to Rs 1,076 crore, driven by a 25% growth in the product business, which now constitutes 72% of total revenue. EBITDA surged by 53% to Rs 116 crore, with the EBITDA margin improving to 10.8%. Net profit rose by 79% to Rs 71.5 crore. The company expects to achieve Rs 3,400 crore in revenue and Rs 200 crore in profit in FY25, with planned capital expenditures of Rs 370-380 crore and two new greenfield facilities in North India. Additionally, PG Electroplast announced a 1:10 stock split.

Ramco Cements: Ramco Cements reported a net profit of Rs 121.4 crore, aligning with estimates. Revenue exceeded expectations at Rs 2,673.3 crore, while EBITDA met forecasts at Rs 417.2 crore. The EBITDA margin was slightly below expectations at 15.6%. Despite volume growth to 5.5 MT, weak prices impacted overall performance. The company reduced its FY25 capex plan to Rs 1,200 crore from Rs 1,700 crore and aims to reach 19 MTPA clinker capacity and 26 MTPA cement capacity by FY26.

Garden Reach Shipbuilders: Garden Reach Shipbuilders saw its net profit double to Rs 111.6 crore from Rs 55.3 crore, with revenue increasing by 69% to Rs 1,015.7 crore. EBITDA rose to Rs 90.6 crore from Rs 20.4 crore, with the EBITDA margin improving to 8.9%. The company is confident of sustained growth, driven by ongoing projects and new orders.

Dhanlaxmi Bank: Dhanlaxmi Bank reported a 9% decline in Net Interest Income to Rs 104.9 crore, with net profit dropping to Rs 3.3 crore from Rs 38 crore last year. The bank posted an operating loss of Rs 17.44 crore, driven by a 64% increase in employee expenses. Gross NPA improved slightly to 4.05% from 4.81%, while net NPA remained stable.

Petronet LNG: Petronet LNG reported a 24.1% increase in net profit to Rs 734.1 crore, with flat revenue at Rs 13,793.2 crore. EBITDA grew by 17.1% to Rs 1,103.6 crore, with the EBITDA margin improving to 8%.

Indiabulls Real Estate: Indiabulls Real Estate completed the acquisition of BLU Annex at an enterprise value of Rs 1,150 crore, reflecting its strategic growth initiatives.

Adani Energy Solutions: Adani Energy Solutions announced plans to consider fundraising via a Qualified Institutional Placement (QIP) on May 27.

Global Market Cues
In a week brimming with earnings reports and global market shifts, Nasdaq-100 futures saw a notable rise on Wednesday evening. Wall Street's attention was riveted on the quarterly results from tech giant Nvidia, which not only exceeded expectations but also announced a significant stock split, propelling its shares above the $1,000 mark in extended trading.

Nvidia, a prominent player in the semiconductor and artificial intelligence sectors, reported stronger-than-expected fiscal first-quarter results, leading to a 6% surge in its stock price during after-hours trading. The company also announced a 10-for-1 stock split, a move that typically makes shares more accessible to a broader range of investors. Nvidia's fiscal second-quarter revenue guidance of approximately $28 billion surpassed the StreetAccount forecast of $36.2 billion, underscoring the company's robust growth trajectory and sustained momentum.

The enthusiasm around Nvidia's performance had a ripple effect across the market. Nasdaq-100 futures jumped 0.4%, while S&P 500 futures added 0.2%. However, futures tied to the Dow Jones Industrial Average dipped slightly by 53 points, or 0.1%.

On the macroeconomic front, US Treasury yields ticked up following the release of the latest Federal Reserve meeting minutes. These minutes revealed a cautious stance among policymakers regarding potential interest rate cuts, reflecting concerns over persistent inflation. The 10-year Treasury yield increased by one basis point to 4.426%, while the 2-year Treasury yield rose nearly 4 basis points to 4.873%.

European stocks closed lower on Wednesday, reflecting ongoing uncertainties about inflation and interest rate trajectories. The pan-European Stoxx 600 fell by 0.37%, with all major bourses ending in the red. The automotive sector saw a notable decline of 1.3%, while oil and gas stocks dropped by 1.2%.

Crude oil futures continued their downward trend, marking the third consecutive session of losses. This decline comes ahead of a critical OPEC meeting in June, where production decisions will be scrutinized. The West Texas Intermediate (WTI) July contract fell to $77.57 a barrel, down $1.09 or 1.39%. Similarly, Brent crude futures for July dropped by 98 cents, or 1.18%, to $81.90 a barrel.

Despite the recent dips, both US and global crude benchmarks have seen gains year-to-date, with WTI up 8.2% and Brent rising 6.3%. Gasoline futures and natural gas also experienced movements, with gasoline down 1.68% but up 17.37% year-to-date, and natural gas rising 6.4% for the day, reflecting a 13.05% increase since the beginning of the year.

Asian markets presented a mixed picture following the release of the US Federal Reserve meeting minutes, which highlighted ongoing inflation concerns and potential hesitation over interest rate cuts. Japan's Nikkei 225 climbed 0.6%, while the broader Topix index rose 0.2%. In contrast, South Korea's Kospi declined by 0.33%, though the small-cap Kosdaq gained 0.22% after the Bank of Korea (BOK) decided to hold its benchmark policy rate steady at 3.5%.

The BOK's decision aligns with a Reuters poll suggesting a possible 50 basis point cut in the fourth quarter. Meanwhile, Australia's S&P/ASX 200 fell by 0.8%, and Hong Kong's Hang Seng index dropped by 1.54%. China's CSI 300 index also saw a slight decline of 0.38%.

In India, the GIFT Nifty was trading at a discount of more than 10 points from the Nifty Futures' Wednesday close, indicating a potentially flat-to-negative start for the Indian market. Investors will be closely watching for any further developments that might influence market movements.

While the Nifty's steady gains and the reduced volatility provide some comfort, the overall market remains in a cautious stance, influenced by election outcomes and corporate earnings. With the Federal Reserve's cautious stance on interest rates and ongoing global economic uncertainties, the market landscape remains complex and dynamic. Investors will need to stay attuned to these developments to make informed decisions in the days ahead.