In the April series of Nifty 50, investors are eyeing potential stocks to allocate their funds, seeking opportunities amidst market fluctuations. Amidst a pause in the three-day upward trend, both the domestic equity benchmarks, Sensex and Nifty 50, observed a decline earlier today, with the 30-share benchmark slipping by 110 points. This downturn was largely attributed to profit-taking activities in specific sectors such as private banking and automobiles, influenced by weak global cues and foreign fund outflows. Notably, the indices had soared to record highs on April 1, mainly led by strong performance in metal stocks due to robust industrial data from China, the leading consumer market. However, they settled around 0.5 per cent higher after this surge.
The BSE Sensex concluded the session with a decline of 110.64 points or 0.15 per cent, settling at 73,903.91, while the broader NSE Nifty experienced a slight dip of 8.70 points or 0.04 per cent, closing at 22,453.30. Despite this, the broader market witnessed a recovery, with the domestically focused BSE smallcap gauge rising by 1.28 per cent and the midcap index climbing by 1.14 per cent.
Investor attention is now turning towards the Monetary Policy Committee (MPC) meeting initiated by the Reserve Bank of India (RBI) on April 3, as it holds significant implications for near-term market movements. The outcome of this meeting, slated for Friday, marks the first pronouncement for the new fiscal year 2024-25 (FY25). Speculation is rife that the central bank might embark on a rate-cut cycle in the third quarter of FY25, as suggested by State Bank of India (SBI) Research.
In a recent derivatives monthly rollover report by Religare Broking, it was noted that Nifty 50 closed around 22,300 after witnessing volume-weighted average price (VWAP)-based buying activity in the latter half of the day. The report also highlighted the sectors with the highest and lowest rollover rates in the March series, indicating shifts in investor sentiment and positioning.
Analyzing the derivatives market further, it was observed that Nifty futures rolled at around 70 per cent compared to 79 per cent in the previous series, with a lower Open Interest (OI) for the new contract. Conversely, Bank Nifty futures rolled at 87 per cent, indicating a higher percentage compared to the prior month. This surge in Bank Nifty futures' OI might be attributed to increased positions during the March expiry, suggesting potential outperformance of the index in the April series.
Religare Broking identified four stocks as top picks for the April series: Indraprastha Gas Ltd (IGL), ICICI Prudential Life Insurance, Adani Ports, and Infosys. These selections were based on various factors including past performance, rollover activity, and technical analysis. For instance, IGL demonstrated consolidation with notable OI addition, signaling positive momentum, while ICICI Prudential Life Insurance showcased a decline in OI, implying potential short covering and fresh inflows.
Looking ahead, the brokerage anticipates sectors such as auto, banking, and fast-moving consumer goods (FMCG) to outperform the index in the April series. Foreign institutional investors' (FIIs) long ratio stands at 45 per cent, indicating reduced hedged positions compared to the previous month, which could influence market dynamics.
From a technical perspective, Religare Broking suggests a 'buy on dips' strategy for Nifty 50, with strong support levels expected around 21,900-22,000. Additionally, the outlook for Bank Nifty is optimistic, with projected levels of 46,000-48,500 for the first fortnight of the April series.
In summary, while market fluctuations continue to influence investor sentiment, strategic stock selection and sectoral analysis remain crucial for navigating the volatile landscape. As Ajit Mishra, SVP - Technical Research at Religare Broking Ltd, emphasizes, maintaining a cautious yet opportunistic approach is key amidst evolving market conditions.
