Trade Setup For April 4: Nifty Consolidating In A Tight Range, 22,500 Key Resistance

Select midcap pharmaceutical and metal stocks continue to demonstrate strength in the market.

<div class="paragraphs"><p>(Source: Envato)</p></div>
(Source: Envato)

Nifty is currently consolidating within a tight narrow range, with key resistance level seen at 22,500. While, select midcap pharmaceutical and metal stocks continue to demonstrate strength in the market.

"The Nifty seems set to appreciate further, once it closes about 22,526," said Hemen Kapadia, Senior Vice President Institutional Equity, KR Choksey Stocks & Securities.

The small consolidation seen should be over in a day or two and with even the Bank Nifty looking positive, he said. "It is just a matter of time before this upside comes true, so it remains a buy on declined market and the overall sentiment also remains positive."

Nifty has been consolidating in a range since last three sessions. The correction on the global bourses, rising crude oil prices, rise in bond yields and the event of RBI policy towards the end of this week may have led to bit uncertainty and hence a consolidation, said Ruchit Jain, Lead Research,

"However, the index has not breached any support and in fact the broader markets have been doing well due to which the market breadth remains positive," Jain said.

The immediate supports for Nifty are placed around 22,340 and 22,250 and till these supports are intact, traders should continue to trade with a positive bias, Jain said. "One can look for a stock specific approach at the moment and when the index surpasses the hurdle of 22,530, one then then participate in the index on the long side as that could lead to a continuation of the uptrend towards 22,700-22,750."

Trade Setup For April 4: Nifty Consolidating In A Tight Range, 22,500 Key Resistance

FII And DII Activity

Overseas investors remained sellers of Indian equities for the third consecutive day on Wednesday.

Foreign portfolio investors sold stocks worth Rs 2,213.6 crore, according to provisional data from the National Stock Exchange.

Domestic institutional investors remained net buyers for the 11 successive session and mopped up equities worth Rs 1,102.4 crore, the NSE data showed.

Nifty Bulls Stand Strong Even As FIIs Offload Indian Equities
Trade Setup For April 4: Nifty Consolidating In A Tight Range, 22,500 Key Resistance

Markets On Wednesday

India's benchmark indices ended little changed amid volatility on Wednesday.

However, the Nifty Midcap 150 hit a fresh lifetime high during the day and settled higher for the eighth day in a row. The Nifty Smallcap 250 closed with gains for the ninth day in a row.

The NSE Nifty settled 18.65 points, or 0.083%, lower at 22,434.65, and the S&P BSE Sensex declined 27.09 points, or 0.037%, to end at 73,876.82.

Nifty, Sensex End Little Changed Amid Volatility; Midcap Hits Record High: Market Wrap

Major Stocks In News

  • Axis Bank: The Competition Commission has approved the proposed infusion of Rs 1,612 crore by the company in Max Life Insurance.

  • Brigade Enterprises: The company signed a joint development agreement with United Oxygen to develop a ‘Grade A’ office space with a leasable area of 3.0 lakh square feet and the project has a gross development value of around Rs 340 crore.

  • Avenue Supermart: The company’s standalone revenue from operations stood at Rs 12,393.5 crore, up 19.9% YoY for the fourth quarter. The total number of stores was 365 as of March 31.

  • Vodafone Idea: The board will meet on April 6 to consider share issuance proposals of equity and/or convertible shares on a preferential basis.

Top Brokerage Call

Citi On Avenue Supermarts

  • The brokerage maintains 'sell' rating with a target price of Rs 3,200 per share.

  • Believes revenue per square feet continues to be impacted by inferior product mix and new store additions in smaller towns.

  • Remains cautious at the current valuation given risks around store additions, earnings and the P/E multiple.

Citi On L&T Finance

  • The brokerage has a target price of Rs 199.

  • Citi believes that trends in two-wheeler, microfinance lending, and retail housing should be robust.

  • Higher retail mix should be yield accretive and should aid in expanding margins further, offsetting the impact of higher funding costs.

  • Supported by fee income, the brokerage expects income to assets ratio to inch-up.

  • As it proposed to create contingency buffer on unsecured portfolio, credit cost is expected to remain elevated at over 2.6%.

  • Operational expenditure to assets will likely remain elevated given senior hirings, branding campaigns, retail roll-out and tech investments.

Global Cues

Recovering sell-offs, share indices in Asia-Pacific region rose on Thursday after the Federal Reserve Chair Jerome Powell indicated rate cuts are imminent this year. Japan's Nikkei was trading nearly 2% higher.

Powell said the recent strong inflation report did not "materially" change the broader picture offered for risk assets. However, the central bank will adhere to wait and watch mode before pulling down the borrowing cost, Bloomberg reported.

The S&P 500 Index and Nasdaq Composite rose 0.11% and 0.23%, respectively, as of Wednesday. The Dow Jones Industrial Average fell by 0.11%.

Brent crude was trading 0.25% at $89.57. Gold gained 0.12% to 2,302.78 an ounce.

Rupee Update

The Indian rupee fell to a record low closing level against the dollar on Wednesday after the greenback surged as the latest economic data in the US trimmed expectations of a rate cut by the Federal Reserve.

The local currency depreciated five paise to close at Rs 83.43 against the US dollar. It had opened at Rs 83.37, according to Bloomberg data.

The rupee had closed at Rs 83.38 a dollar on Tuesday. On a year-to-date basis, it has depreciated 0.14%.

Trade Setup For April 4: Nifty Consolidating In A Tight Range, 22,500 Key Resistance
Rupee Ends At Record Closing Low As Traders Await Powell Speech