Market Outlook for May 4: Key Factors to Consider Ahead of the Opening Bell

Indian Equities Experience Mixed Trading Session Ahead of Five State Elections

The Nifty 50 index closed the day with a 0.7% loss after a gap-down opening, but managed to defend the 20-day EMA as well as the midline of the Bollinger Bands on a closing basis. This defensive move was driven by healthy buying interest at lower levels on April 30.

The market will closely watch the results of the five state elections due on Monday, while oil prices remain elevated. However, there is hope of a peace deal after Iran's fresh proposal to the US. The Nifty 50 has to break and sustain above 24,350 for a further move toward 24,600; until then, consolidation may be seen, with immediate crucial support at 23,800, according to experts.

Key Levels for Nifty 50 and Bank Nifty

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The Nifty 50 showed a nice recovery from lower levels due to healthy buying interest despite pressure at higher levels and closed near the 24,000 zone. The index also managed to defend the 20-day EMA and the midline of the Bollinger Bands on a closing basis, though it sustained below the 50-day EMA. The RSI remained sideways above 50 for the last four sessions, while the MACD and signal line gap narrowed further, reflected in the histogram's green bars, which have been shrinking further. This setup points to a range-bound market with a mild bullish bias, but weakening momentum.

The Bank Nifty also showed recovery from the day's low and formed a thin-body candle with a prominent lower shadow and a minor upper shadow, indicating accumulation at lower levels. The index closed 1% down. Despite the recovery, the index remained below the midline of the Bollinger Bands as well as below all key moving averages, with short- and medium-term moving averages trending downward. The RSI dropped to 45.54, while the MACD is on the verge of a bearish crossover, with the histogram's green bars shrinking consistently for the past seven consecutive sessions. It points to a weak-to-neutral market with early signs of bearish pressure, despite some buying at lower levels.

Options Data

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The maximum Call open interest for the Nifty 50 was seen at the 24,500 strike (69.51 lakh contracts), which can act as a key resistance level for the index in the short term. The maximum Call writing was observed at the 24,000 strike, which saw an addition of 30.26 lakh contracts. On the Put side, the 24,000 strike holds the maximum Put open interest (53.12 lakh contracts), which can act as a key level for the Nifty in the short term.

Funds Flow and Put-Call Ratio

The Nifty Put-Call ratio (PCR) dropped to 0.98 on April 30, compared to a 1.04 previous session. The increasing PCR indicates the firming up of a bullish sentiment in the market. The fear gauge, India VIX, jumped 5.86% to 18.46, signalling some discomfort for bulls.

Other Market Observations

A long build-up was seen in 17 stocks, indicating a build-up of long positions. 55 stocks saw a decline in open interest (OI) along with a fall in price, indicating long unwinding. 120 stocks saw an increase in OI along with a fall in price, indicating a build-up of short positions. 21 stocks saw short-covering, meaning a decrease in OI, along with a price increase.

Stocks Under F&O Ban

Securities banned under the F&O segment include companies where derivative contracts cross 95% of the market-wide position limit. No stocks were added to or removed from the F&O ban list.