After The Bell: Profit booking on D-St: What should investors do on Wednesday?

Market Outlook
With the earnings season drawing to a close, the markets would focus on global markets and upcoming monetary policy review meet for cues, say experts.

With the earnings season drawing to a close, the markets would focus on global markets and upcoming monetary policy review meet for cues, say experts.

Indian market closed flat on June 1 as investors preferred to book profits after four days of the rally. The S&P BSE Sensex had a touch-and-go moment with 52,000-level while the Nifty50 closed below 15,600 levels after touching a record high of 15660.75.

Let’s look at the final tally on D-Street – the S&P BSE Sensex closed flat at 51,934 while the Nifty50 was down by about 8 points at 15,574.

Sectorally, buying was seen in oil & gas, energy, consumer durables while profit booking was visible in metals, banks, realty, and consumer discretionary. Nifty Bank was down 0.5 percent at 35,337.

Fall in COVID cases and stable global cues supported the sentiment, but muted macro data led to some profit-taking. India’s manufacturing PMI stood at a 10-month low in May as new orders dwindled.

According to the monthly IHS Markit India Manufacturing Purchasing Managers’ Index (PMI) survey released on June 1, manufacturing PMI stood at a ten-month low of 50.8 in May, down from 55.5 in the previous month of April.

“Despite positive global cues and optimism from declining fresh COVID cases, domestic bourses erased their early gains and traded flat owing to weak economic data,” Vinod Nair, Head of Research at Geojit Financial Services said.

“While upcoming RBI policy and likely delay in the start of monsoon season bought cautiousness to the momentum,” he said.

Broader markets slightly underperformed benchmark indices. The S&P BSE Mid-cap index closed flat while the S&P BSE Small-cap index fell 0.3 percent.

Here’s what experts think that investors should do on May 31:

Chandan Taparia, Vice President | Analyst-Derivatives, Motilal Oswal Financial Services Limited

Technically, the index formed a Bearish candle on the daily scale as it closed lower than its opening zones but it continued its formation of higher highs of the last eight sessions.

Now, the index has to hold above 15,500 zone to witness an up move towards a fresh lifetime high of 15,750 zone while on the downside, support exists at 15,431 and 15,300 zone.

Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas.

The Nifty opened on a positive note and attempted to stretch towards 15,700, which is our short-term target. The index fell marginally short of the target and entered consolidation mode. So, the index has taken a pause today after seven consecutive positive sessions.

Though the overall outlook is positive, the Nifty can witness a brief consolidation near 15,600-15,400 before heading higher.

A dip towards 15,450-15,400 can be taken as a fresh buying opportunity. On the higher side, 15,700 and 16,000 will be the short-to-medium-term targets to watch out for.

Ajit Mishra, VP – Research, Religare Broking Ltd

A mixed trend was witnessed on the sectoral front wherein oil & gas, consumer durables, and FMCG ended with decent gains while metal, banking, and auto closed in the red. Amid all this, the Nifty index managed to settle flat at 15,575 levels.

It’s a healthy pause and we may see further consolidation in the benchmark in the following session.

However, there’ll be no shortage of trading opportunities on the stock-specific front so traders should maintain their focus on identifying the sectors/stocks and accumulate them on dips.

With the earnings season largely behind us, the markets would focus on global markets and upcoming monetary policy review meet for cues.

Rohit Singre, Senior Technical Analyst at LKP Securities.

The Nifty index showed small profit booking from higher levels and closed the day flat and formed a Doji sort of candle pattern on the daily chart which suggests indecision in the markets.

Going forwards, 15,500 will be the first and strong support for Nifty, and any close below said levels can only hamper the structure. The index could face some resistance near the 15,620-15,700 zone.

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