Trade Setup: Market Sees A Wave Of Recovery, Nifty Back Above 22,200; Q4 Earnings, US CPI In Focus

In a week marked by turbulence, the Nifty index showcased resilience, bouncing back from Monday's lows with a surge of 400 points. Investors witnessed a rollercoaster ride as the index swung between crucial support and resistance levels, hinting at a cautious yet optimistic sentiment in the market.

On Tuesday, the Nifty traded within a range of nearly 200 points, eventually closing above the 22,200 mark. However, it faced resistance at 22,300, signalling a potential hurdle for further upward momentum. Notably, this level coincides with the 50-day Moving Average, adding significance to the barrier.

While the Nifty navigated its course, the broader markets experienced a surge, with the Midcap and Smallcap indices making notable gains. The Smallcap index, in particular, surged 2%, led by sectors like autos, metals, PSU Banks, and Oil & Gas stocks.

Another highlight of the day was the decline in the India Volatility Index (VIX), breaking a streak of 13 consecutive sessions of increase. Although the drop wasn't substantial, it offered a momentary relief to investors amidst the recent market uncertainties.

Looking ahead, Wednesday's trading session promises reactions to earnings reports from key players such as Bharti Airtel, Colgate-Palmolive, and others. Additionally, investors will keep a close watch on companies like Dixon Technologies and PFC set to announce results on Wednesday.

Institutional activity remained a significant factor, with foreign institutions continuing to offload stocks worth Rs 4,000 crore in the cash market on Tuesday. Conversely, domestic institutions maintained their stance as net buyers.

Similar to the Nifty, the Nifty Bank also witnessed consolidation, edging closer to the 48,000 mark. However, sustaining levels above this milestone proved challenging, setting the stage for a crucial weekly options expiry on Wednesday.

In the Futures and Options (F&O) segment, Nifty 50's May futures saw a decrease of 7.6% and 8.93 lakh shares in Open Interest, now trading at a premium of 90.85 points. Conversely, Nifty Bank's May futures witnessed a 2.6% increase and 59,985 shares in Open Interest.

Birlasoft entered the F&O ban list, while PNB exited. Other stocks like Balrampur Chini, Canara Bank, and Vodafone Idea remained in the ban list, indicating ongoing volatility in specific segments of the market.

For Thursday's weekly expiry, Open Interest addition was observed in the 22,250 and 22,500 strike calls of the Nifty, while shedding was seen in the 22,100 and 22,000 strikes. On the Put side, strikes between 22,000 and 22,200 witnessed Open Interest addition, shaping expectations for the expiry.

In Wednesday's trading session, several key players are poised to steal the spotlight, each with its own narrative of financial performance and strategic moves. From telecom giants to FMCG behemoths, here's a roundup of stocks likely to sway the market:

Bharti Airtel: Bharti Airtel, a titan in the telecom industry, reported robust figures, with revenues soaring to Rs 37,599 crore and EBITDA touching Rs 19,590 crore. Notably, the Average Revenue Per User (ARPU) clocks in at Rs 209, a slight uptick from the previous quarter. The company's subscriber base also witnesses a healthy growth, reaching 352.25 million.

Shree Cement: Shree Cement reported its fourth-quarter results after market close yesterday boasting an EBITDA per tonne of Rs 1,392 and a revenue of Rs 5,101 crore. The company's focus on volume growth pays off, with higher-than-expected volumes at 9.53 MT. Additionally, a decline in power and fuel costs coupled with high operating leverage propels the EBITDA margin to 26%.

Siemens India: Siemens India surpassed market expectations with a net profit of Rs 802.5 crore, marking a 70% year-on-year increase. Revenue climbed 18.4% to Rs 5,749.9 crore, accompanied by a rise in EBITDA margin to 15.3%. Moreover, the company announced to demerge its energy business into a separate listed entity.

Cipla: Cipla's promoter group aims to divest up to 2.53% stake in the company through a block deal, with an offer size pegged at Rs 2,637 crore.

Colgate-Palmolive: Colgate-Palmolive reported a net profit of Rs 379.8 crore and a revenue of Rs 1,490 crore. The company maintains an EBITDA margin of 35.7%, driven by sequential growth momentum and a strong performance in the Toothpaste business. Notably, rural markets outpace urban counterparts.

Apollo Tyres: Apollo Tyres reported with net profit dipping 13.7% to Rs 354 crore amidst a flat revenue of Rs 6,258 crore. Despite the headwinds, the company managed to improve its EBITDA margin to 16.4%.

Mahindra & Mahindra: Mahindra & Mahindra's divestment of its stake in New Delhi Centre for Sight to Space Investments, Defati Investments & Infinity Partners for Rs 425.4 crore marks a move towards portfolio optimization and value realization.

Radico Khaitan: Radico Khaitan celebrates a healthy year, with net profit surging 26.5% to Rs 54 crore and revenue climbing 30% to Rs 1,079 crore. The company's focus on premium brands pays off, with robust volume growth and an optimistic outlook for the future.

Patanjali Foods: Patanjali Foods navigates through challenges in the FMCG landscape, with operational performance driven by the FMCG segment. Despite a decline in profits due to increased finance costs, the company maintains a steady revenue growth trajectory.

Shifting focus towards the global market trends, US stock futures show little change, reflecting caution ahead of April's Consumer Price Index (CPI) report. Futures tied to the Dow Jones Industrial Average gained 17 points, while S&P 500 futures and Nasdaq 100 futures remained near the flatline.

The overnight movements mirrored a positive session on Wall Street, where the Nasdaq Composite surged 0.75% to reach a new closing record. The S&P 500 also climbed 0.48%, inching closer to its own record high, while the Dow Jones Industrial Average saw a gain of 0.32%.

All eyes are now on Wednesday's inflation report, which is expected to provide insights into the persistent issue of rising prices. Economists anticipate a 0.4% monthly gain in the CPI, with a 0.3% increase expected when excluding volatile food and energy prices. Year-over-year, headline CPI is projected to show a 3.4% gain, following a 3.5% rise in March.

Market sentiment was tempered by a slight decrease in the 10-year US Treasury yield on Tuesday, as traders digested a wholesale inflation report that exceeded expectations. Initially surging above 4.5% in response to the data, the 10-year yield later retreated by about four basis points to 4.445%. Meanwhile, the 2-year Treasury yield slipped approximately three basis points to 4.819%.

In Europe, stocks closed marginally higher on Tuesday, influenced by the latest US inflation figures. The pan-European Stoxx 600 index edged up 0.2%, with auto stocks leading the gains, rising more than 1.3% for the session.

On the commodities front, oil prices experienced a downturn on Tuesday, driven by concerns that persistently high interest rates could dampen demand. However, potential supply disruptions due to tensions in the Middle East and wildfires in Canada provided some support. Brent crude futures settled down 1.18% at $82.38 a barrel, while U.S. West Texas Intermediate crude futures (WTI) closed 1.39% lower at $78.02 a barrel.

Across the Asia-Pacific region, markets largely mirrored Wall Street's gains, buoyed by the Nasdaq Composite's record-breaking performance despite inflationary pressures. Australia's S&P/ASX 200 index opened 0.44% higher, while Japan's Nikkei 225 and the broader Topix index gained 0.75% and 0.53%, respectively.

The initial negative reaction to April's producer price index reading, which exceeded expectations at 0.5%, was later overshadowed by positive sentiment as March wholesale prices were revised downwards to show a 0.1% decline.

On the domestic front, GIFT Nifty was seen trading at a premium of more than 60 points from Nifty Futures Tuesday close, indicating a start in the green for the Indian market.

As the market navigates through fluctuating sentiments and earnings reports, investors brace themselves for further volatility while seeking opportunities amidst the uncertainty.