Indian stock markets have broken out of their sideways consolidation and are now caught in a broader bull run ahead of the high-stakes Lok Sabha election results due on June 4, 2024. The Nifty 50 and Sensex have reclaimed their record highs, gaining around two per cent this week, marking their best week in three months. The positive tone in the market was influenced by global markets, with strong buying in select heavyweights significantly boosting sentiment.
The Nifty 50 reached a new milestone of 23,000, while the Sensex closed near the week’s high at 75,410.3. All major sectors contributed to this movement, with metal, energy, and auto leading the way. The sentiment improved following the Reserve Bank of India’s announcement of a ₹2.11 lakh crore record dividend payout to the government for FY24, surpassing expectations.
Analysts expect the Nifty 50 to move towards the 23,150-23,400 range soon, with a gradual up-move expected. However, markets may witness some volatility this week due to the scheduled expiry of May month derivatives contracts. Traders are advised to continue the stock-specific trading approach, with a preference for large-cap and large mid-cap stocks for short-term trades.
In the coming week, investors will keenly eye the final batch of the January-March quarter results for fiscal 2023-24, election voter turnout, domestic and global macroeconomic data, foreign fund inflow, crude oil prices, and global cues. The buzz in primary markets may remain subdued as a few new initial public offerings (IPO) and listings are slated across the mainboard and small-and-medium enterprises (SME) segment.
Overall, the market is witnessing a healthy rally led by fairly valued largecaps, with the trend of outperformance of largecaps likely to continue. Foreign institutional investors (FIIs) have significantly lowered their selling streak amid robust domestic market sentiments, contributing to a sharp rally in markets. The upcoming Lok Sabha election results are expected to give a boost to FII flows, shifting sentiments in Indian markets.
Global cues, including US bond yield movement, commodity prices, economic data releases from Japan and the US, and movements in the global currency market, will also be important factors to consider. International crude oil prices have logged their longest weekly losing streak in five months, awaiting the OPEC+ meeting on June 2 to decide on extending voluntary oil output cuts.
In the corporate action space, several major companies will trade ex-dividend in the coming week, with Ajanta Pharma declaring a buyback of shares on May 30, 2024. Technical views suggest a bullish structure in the market, with a buy-on-dip approach recommended by analysts. Investors are advised to consult with certified experts before making any investment decisions, as market conditions can change rapidly.
