Trade Setup: Nifty Ends April April Series With Strong Gains; Eyes On Global Cues And Earnings

The Nifty index wrapped up the April Futures & Options (F&O) series on a positive note, marking a significant turnaround after a tumultuous month marked by dramatic swings. Closing with gains exceeding 200 points, the index displayed resilience amid market volatility, showcasing its ability to recover from substantial dips.

April witnessed a rollercoaster ride for the Nifty, reaching a record high of 22,775 on April 10, only to plummet by 1,000 points by April 19, hitting a recent low of 21,777. However, displaying remarkable resilience, the index managed to claw back 80% of the losses incurred during this period by the end of the series.

Notably, April marked the third consecutive positive series for the Nifty, positioning it just 220 points shy of its previous record high. The index also achieved a milestone by recording gains for five consecutive sessions, a feat not seen in over two months. Over the week, the Nifty surged by 1.8%, recuperating from previous losses and edging further upwards.

However, amidst the optimism, concerns loom over global cues, particularly in light of the overnight performance of US markets, which despite rebounding from the day's lows, raise uncertainties for the days ahead.

Friday also holds significance in the Indian political landscape with the second phase of Lok Sabha polls scheduled, encompassing 89 constituencies across 13 states, where voters will exercise their democratic rights.

On the corporate front, earnings reactions continue to steer market sentiments, with companies like Tech Mahindra, IndusInd Bank, Bajaj Finance, and L&T Technology Services reacting to their quarterly performance, which was reported post-market hours on Thursday. Notable reports to watch out for on Friday include HCLTech and Maruti among Nifty constituents, and others like Mahindra Holidays, Bank of Maharashtra, SBI Life, CSB Bank, and Motilal Oswal in the broader markets. Additionally, Motilal Oswal is set to consider a proposal for issuing bonus shares.

In terms of market activity, domestic institutions emerged as significant buyers in the cash market on Thursday, countering the selling pressure from foreign institutions.

Despite Kotak Mahindra Bank's downward pull, the Nifty Bank managed to secure an impressive 300-point gain on Thursday, supported by heavyweight players like SBI, and ICICI Bank, and led by Axis Bank, which saw over a 5% surge post its quarterly results. The Nifty Bank closed near the 48,500 mark for the first time since April 12, marking a positive sentiment shift.

Looking ahead to the new F&O series, indicators suggest cautious optimism. The Nifty 50's May futures witnessed a notable increase in Open Interest, with the index trading at a premium of 83.6 points. Notably, Vodafone Idea entered the F&O ban on the first day of the new series, while Aditya Birla Fashion, SAIL, and Hindustan Copper exited the ban list.

In terms of options activity, for the upcoming May 2 expiry, the Nifty 50 saw Open Interest additions in the Call side strikes between 22,500 and 22,800, while similar additions were observed on the Put side between 22,300 and 22,600, setting the stage for potential market movements in the coming weeks.

As investors gear up for Friday's trading session, a myriad of market-moving updates and earnings reports are poised to influence the trading landscape. From banking giants to technology stalwarts, here's a comprehensive rundown of stocks to watch:

IndusInd Bank: Despite reporting a net interest income slightly lower than market expectations at Rs 5,376.5 crore, IndusInd Bank's net profit of Rs 2,349.1 crore met estimates. Notably, the bank's gross and net NPAs remained unchanged from the previous quarter. However, concerns arise as net interest margin (NIM) hit a six-quarter low at 4.26%, coupled with a cost-to-income ratio at its worst in eight years, raising eyebrows among investors.

Bajaj Finance: Eyeing an ambitious target of adding 12-14 million new customers in FY2025, Bajaj Finance maintains its trajectory with an asset under management (AUM) growth rate between 26% and 28%. However, caution looms as net profit and net interest income for the March quarter fell below expectations. Moreover, a projected decline in net interest margins (NIMs) suggests a potentially rear-ended profit growth for the financial year.

Tech Mahindra: While reporting a 1.6% decline in US Dollar revenue to $1,548 million, Tech Mahindra's CEO, Mohit Joshi, remains optimistic, forecasting a better FY2025 compared to the previous year. However, consecutive drops in constant currency revenue over the past four quarters raise concerns despite securing deal wins worth $500 million.

L&T Technology Services: Despite beating revenue growth estimates with a 5.1% constant currency growth, L&T Technology Services faces scrutiny as its EBIT margin falls short of projections at 16.9%. Moreover, the company's guidance for FY2025 suggests a tempered revenue growth rate of 8-10%, lower than market expectations.

Zensar Technologies: Witnessing a 2.5% surge in US Dollar revenue to $148.1 million, Zensar Technologies maintains its growth trajectory, albeit with a slight decline in EBITDA margin. With a current order book standing at $181.5 million, the company demonstrates stability amid market fluctuations.

Cyient: Despite reporting a sequential increase in US Dollar revenue to $224 million, Cyient's conservative growth outlook for its digital, engineering, and technology business dampens investor sentiment. Flat EBIT margins and a soft outlook for FY2025 hint at potential challenges ahead.

Tata Steel: Commencing a substantial £1.25 billion investment to construct an electric arc furnace in Port Talbot, Tata Steel outlines its commitment to innovation and sustainability. However, the closure of two blast furnaces at Port Talbot and a voluntary redundancy process across Tata Steel UK raise questions about the company's restructuring efforts.

Vodafone Idea: Amidst heightened market activity, Vodafone Idea witnesses a combined delivery worth Rs 7,500 crore on Thursday, highlighting investor interest despite the company's recent financial challenges.

In overnight trading on Thursday, S&P 500 futures soared as technology behemoths Alphabet and Microsoft reported stellar earnings, setting the stage for a potential rebound after a turbulent day on Wall Street. Here's a breakdown of the latest market developments:

Futures linked to the S&P 500 surged by 0.7%, with Nasdaq 100 futures spiking by 1%, buoyed by impressive performances from Alphabet and Microsoft. Alphabet's shares leapt 11% after a robust first-quarter earnings report, marked by the company's historic authorization of its first dividend and a massive $70 billion buyback. Meanwhile, Microsoft witnessed a 4% climb following stellar fiscal third-quarter results, surpassing market expectations.

Despite the tech-driven optimism, Thursday witnessed a downturn in the major averages on Wall Street. The Dow Jones Industrial Average slid by 375 points, while the S&P 500 and Nasdaq Composite dropped by 0.5% and 0.6%, respectively. The sell-off was triggered by new US economic data revealing a significant slowdown in growth, coupled with mounting inflation concerns. The first-quarter GDP expanded by 1.6%, falling short of the Dow Jones forecast of 2.4%, while the personal consumption expenditures price index rose by 3.4%, well above the previous quarter's increase.

US Treasury yields surged following the release of the GDP report, reflecting concerns over slowing growth and rising consumer prices. The benchmark 10-year Treasury yield climbed by 4.8 basis points to 4.702%, reaching its highest level since November. Similarly, the 2-year Treasury rate gained 6.1 basis points to 4.998%.

European markets closed lower on Thursday, grappling with a mixed bag of earnings reports and potential mining takeover bids. The Stoxx 600 index ended 0.6% lower, with industrial stocks leading losses. Meanwhile, crude oil futures rose amid concerns over US economic growth and geopolitical tensions surrounding a potential Israeli invasion of Rafah in southern Gaza.

In Asia-Pacific markets on Friday, investors awaited the Bank of Japan's policy decision and inflation figures from Tokyo. The Nikkei 225 and Topix in Japan edged higher ahead of the BOJ decision, while South Korea's Kospi and Hong Kong's Hang Seng index also posted gains. However, Australia's S&P/ASX 200 dipped, weighed down by industrial and health services stocks.

Turning focus to the domestic market, the GIFT Nifty was seen trading flat against Nifty Futures' Thursday close, indicating a muted start for the Indian market.