The week concluded with a notable downturn on Friday, marking a pause in the recent bullish trend, though the Nifty still managed to close above the 24,000 threshold. The VIX, which had been hovering around 15 earlier in the week, experienced a 5.5% rise on Friday, finishing above 17. This uptick signals a growing expectation of market volatility, although it remains far from alarming levels seen earlier in the month.
Will the May Series Sustain April’s Positive Momentum?
The Nifty50 wrapped up the April series on a strong note, buoyed largely by gains in the Banking and Finance sectors, along with FMCG. In contrast, the IT sector lagged significantly, followed closely by Metals and Mining.
The Nifty’s rollover rate for March was reported at 79.08%, slightly below the three-month average of 79.58%. For the Bank Nifty, the figure came in at 75.05%, down from 76.98% the previous month. Interestingly, 78% of stock futures closed positively in April, a slight dip from 79% in March but a notable improvement over the 66% seen in April 2024.
Key Rollovers Observed in April:
- Highest: Crompton, Pidilite, Torrent Power, JSW Energy, Indigo
- Lowest: Siemens, Persistent Systems, Delhivery, Kalyan Jewellers
In terms of sector performance, Cement, Auto-Ancillary, Retail, and Chemicals experienced the highest rollovers, while Healthcare and Power showed the least.
Bank Nifty Slows Down
The Bank Nifty saw a significant reversal of gains following impressive earnings reports from Axis Bank. This decline occurred despite a recent surge that had pushed the index to a new record high, while the Nifty continues to lag behind its September peaks. Major contributors to this week’s drop included Axis Bank and HDFC Bank, with most index majors bordering on overbought conditions. Analysts anticipate a pullback towards the 53,200-52,850 range in the upcoming week, where renewed buying interest is expected.
Next week will bring more earnings announcements from several banks, including SBI, Kotak Bank, Indian Bank, IOB, CUB, Bandhan Bank, Equitas Small Finance Bank, UCO, and IDBI. So far, 33% of index constituents have reported results, with 25% showing positive outcomes. Notably, only Axis Bank and SBI have failed to achieve new highs in 2024. The market is keenly awaiting SBI’s results, especially given its low rollover at 73 in the April series, the lowest in six months.
Nifty Outlook: What Lies Ahead?
On Friday, an alarming 91% of the Nifty 500 closed lower than the previous day, indicating a potential halt to the ongoing rally. Additionally, 37% of Nifty 500 stocks that had been above their respective 10-day SMA fell below this mark.
The emergence of an evening star pattern, coupled with Friday’s significant decline, suggests the potential for a downturn targeting the 23,300-23,050 range. However, support from the March peak, which facilitated a late Friday pullback, offers some optimism for a swift return to an upward trend without a prolonged correction. For this to materialize, a decisive move beyond 24,190 is essential, which could pave the way for the 24,500-850 range to come back into focus.
This market analysis is crucial for investors looking to navigate the complexities of the current financial landscape.
Disclaimer: The content provided here reflects personal opinions and analyses. Investors are advised to conduct their own research and consult financial advisors to make informed decisions tailored to their individual circumstances.
