- Tuesday marked the third consecutive day of declines for the domestic stock indices, Sensex and Nifty 50, driven by profit-taking in capital goods, energy, and power stocks.
- The market sentiment was further dampened by nervousness surrounding the upcoming election outcomes.
- India VIX spiked to a two-year high at 24.14, reflecting increased market volatility.
Discover the latest trends and insights in the stock market as Sensex and Nifty 50 face a third day of decline amidst election uncertainties and profit-taking in key sectors.
Sensex and Nifty 50 Experience Third Day of Decline
The 30-share BSE Sensex closed at 75,170.45, down 220.05 points or 0.29%, after a day of fluctuations between gains and losses. It reached a peak of 75,585.40 and a low of 75,083.22 during the trading session. Similarly, the NSE Nifty started the day on a positive note but ended 44.30 points or 0.19% lower at 22,888.15.
Market Sentiment and Volatility
Prashanth Tapse, Research Analyst and Senior Vice President of Research at Mehta Equities, noted that the Nifty 50 continued its downward trend for the third consecutive day due to caution ahead of six major events: the US PCE Inflation on May 31st, the May F&O expiry on May 30th, the US GDP on May 30th, India’s GDP on May 31st, and the May Auto Sales on June 1st. These events are expected to contribute to short-term volatility in the market.
Nifty 50 Outlook
Sagar Doshi, Senior Vice President- Research at Nuvama Professional Clients Group, highlighted that the Nifty 50 has remained flat for the third consecutive day following a significant rally last Thursday. Market participants are exercising caution ahead of the general election outcome, coupled with a high VIX environment. The India VIX has surged over 100% in the past two fortnights. Despite this, the Nifty 50 has gained over 1,200 points from this month’s low and is consolidating within the same range ahead of the major event outcome. Chart patterns suggest that the index could scale towards 23,500+ unless it closes below 22,700.
Bank Nifty Outlook
The Bank Nifty has recouped nearly 90% of its losses from earlier this month. Foreign Institutional Investors (FIIs) have covered their index short positions and turned net long ahead of the election outcome, leading to increased participation in private banks. This trend is expected to continue, with the Bank Nifty attempting to reach fresh all-time highs based on daily chart patterns. Any dips below 49,000 are likely to serve as buying opportunities for index longs.
Top Stock Recommendations by Sagar Doshi
Sagar Doshi has recommended three stocks for Wednesday:
Indraprastha Gas Ltd (Buy)
Last Close Price (LCP): ₹472.70; Stop Loss: ₹455.00; Target Price: ₹512.00
Indraprastha Gas has taken multiple supports at its recent stance at the 200 DMA on daily charts. The chart is now poised for a breakout above a sloping cup and handle formation. Momentum is likely to escalate once a close above 478 is achieved, with the potential for a 10% gain from the current market price (CMP). The last four days of price action have established a strong base for the stock.
Sun TV Network Ltd (Buy)
LCP: ₹660.70; Stop Loss: ₹634.00; Target Price: ₹711.00
Sun TV Network has been forming higher highs and higher lows over the past two months. The stock has taken support at the 200 DMA three times in the past month, ensuring a solid base. Today’s trading session saw volumes at a nine-month high, indicating that the upswing is likely to extend beyond the 700 mark.
HDFC Asset Management Company Ltd (HDFC AMC) (Buy)
LCP: ₹4,011.60; Stop Loss: ₹3,790.00; Target Price: ₹4,450.00
HDFC AMC has overcome the selling zone of 3950-4000, where it faced profit-taking over the past couple of months. Today’s session saw a trendline pattern breakout at this higher range, suggesting an 8-10% follow-up move in the direction of the breakout. Momentum indicators also suggest that the stock is ready for a fresh upswing.
Conclusion
In summary, the domestic stock indices, Sensex and Nifty 50, have faced a third consecutive day of decline due to profit-taking and election-related uncertainties. Market participants are advised to stay cautious ahead of significant upcoming events, which are expected to contribute to short-term volatility. Investors should consider the top stock recommendations provided by Sagar Doshi for potential gains in the current market environment.
