Trade Setup For June 4: Nifty Set To Scale New Highs On Elections' Grand Finale

India's equity gauges are set to witness yet another record-breaking session as the grand finale of India's Lok Sabha elections is set to begin. The markets logged their best session in over three years as the exit polls showed a clear majority for the incumbent government.

Both Nifty and Sensex renewed their intraday highs of 23,338.70 and 76,738.89, respectively.

The outcome of the general election may cause market volatility and in the immediate term, 23,500-23,800 will serve as resistance points, according to Neeraj Sharma, AVP technical and derivatives research at Asit C. Mehta Investment Interrmediates Ltd. "On the downside, the recent breakout peak of 23,110 will act as the first key support for the index."

With the counting process underway, public sector enterprises, financials, infrastructure, railway and defence will be in focus.

The market might reach new highs given the clear majority for the ruling party in exit polls, good macro trends, and solid corporate earnings, according to Siddhartha Khemka, head of retail research, Motilal Oswal Financial Services Ltd. "One can focus on manufacturing, capex, infrastructure and financials as theme for long-term investment."

With significant volatility expected, Nifty has now established a base in the 22,600-22,800 range, and a decisive close above 23,400 could drive it towards the 24,000 mark, said Ajit Mishra, senior vice president, research, Religare Broking Ltd.

For Bank Nifty, as long as the index remains above its breakthrough level, the bull runs might extend to 52,000-52,700. "On the downside, trend line support is nearing 50,600 levels, with the recent breakout point at 49,975.”

The GIFT Nifty was trading 32 points, or 0.14% higher at 23,499.00 as of 06:26 a.m.

The Nifty May futures were up by 3.3% to 23,407.9 at a premium of 144 points, with its open interest down by 3.37%. The Nifty Bank May futures were up by 4.3% to 51,283.05 at a premium of 303.1 points, while its open interest was up by 0.36%.

The open interest distribution for the Nifty June 6 series indicates that the 20,200 level is seeing the most put strikes, and call strikes of 24,700 have the maximum open interest.

For the Bank Nifty options' June 5 expiry, the maximum call open interest was at 57,000 and the maximum put open interest was at 40,000.

Overseas investors were net buyers of Indian equities on Monday.

Foreign portfolio investors mopped up stocks worth Rs 6,850.8 crore—the highest in two months—while domestic institutional investors remained net buyers for the 10th day and bought equities worth Rs 1,914 crore, according to provisional data from the National Stock Exchange.

India's key equity indices logged their best session in over three years as traders cheered exit polls, which projected victory for the Bharatiya Janata Party-led National Democratic Alliance in the 2024 Lok Sabha elections, along with a better than expected GDP for the country. On Monday, both indices closed at record highs.

The NSE Nifty 50 closed 733.20 points, or 3.25% higher at 23,263.90, and the S&P BSE Sensex gained 2,507.47 points, or 3.39% to end at 76,468.70. Both Nifty and Sensex renewed their intraday highs of 23,338.70 and 76,738.89, respectively.

All sectoral indices on NSE ended higher, with Nifty PSU Bank shooting over 8%.

Broader markets also rose. The S&P BSE Midcap closed with 3.54% gains and the S&P BSE Smallcap ended 2.05% higher on Monday.

All sectoral indices on the BSE gained. S&P BSE Utilities rose the most. The market breadth was skewed in the favour of buyers.

Around 2,341 stocks rose, 1,619 fell and 155 remained unchanged on the BSE.

• Sectors: Public sector enterprises, financials, infrastructure, railway, and defence will be in focus with the Lok Sabha election results to be announced on Tuesday.

• ICICI Bank Ltd. and Adani Group: The bank and Adani One launched co-branded credit cards with airport-linked benefits. The credit cards are to be rolled out in collaboration with Visa.

• Adani Power Ltd.: The company plans to amalgamate its subsidiary, Mahan Energen, with Stratatech Mineral Resources to enhance fuel security and competitiveness in the power market.

• Zee Entertainment Enterprises Ltd.: The company's board meeting is scheduled for June 6 to consider raising funds by way of the issuance of equity shares.

Most Asia-Pacific markets were trading lower in early trade on Tuesday with all eyes on India's general election results, scheduled to be out later in the day.

The Nikkei 225 was 180.62 points or 0.46% down at 38,742.41, and the KOSPI was 12.99 points or 0.48% down at 2,669.53 as of 06:23 a.m.

After seven phases of polling, the Election Commission is preparing to announce the results of the Lok Sabha 2024 election on Tuesday.

US treasuries climbed as a weak manufacturing reading fueled speculation the Federal Reserve will have room to cut interest rates this year, Bloomberg said.

The S&P 500 rose 0.11% and the Nasdaq Composite rose 0.56% as of Monday. The Dow Jones Industrial Average fell by 0.30%.

• US Dollar Index at 104.01.

• US 10-year bond yield at 4.40%.

• Brent crude down 0.20% at $78.16 per barrel.

• Nymex crude down 0.17% at $74.05 per barrel.

• Bitcoin was down 0.39% at $68,825.38.

The Indian rupee strengthened on Monday on likely foreign fund inflows into local equities, following India's upbeat GDP growth data and exit polls showing a landslide win for the PM Narendra Modi-led NDA.

The local currency strengthened by 32 paise to close at Rs 83.14 against the greenback. It had opened at Rs 82.99. The local legal tender had closed at Rs 83.46 on Friday.