Trade Setup: Q4 Earnings Are the Main Focus, Nifty Maintains Winning Streak Ahead of April F&O Expiry

For the fourth day in a row, the Nifty index continued to rise, exhibiting a trend of hitting intraday highs and then retracing a little bit but still holding firm above critical support levels. Investors are anticipating a chaotic day as the market gets ready for the Thursday expiration of the April Futures and Options (F&O) series, given the index’s turbulent month-long journey.

The Nifty has held above the lower end despite facing significant resistance in the 22,400–22,500 zone, suggesting a positive outlook. The Nifty saw notable volatility over the series, reaching all-time highs, retreating more than 1,000 points, and now slowly beginning to rise again, with a total gain of 80 points so far.

The Nifty’s steady construction of higher highs and higher lows over the last four trading sessions is one of the encouraging signals. The index is clearly moving upward toward the 22,500 level even if it is having difficulty maintaining current levels, even with sporadic corrections.

However, the performance of important elements might provide obstacles for Nifty’s path on the monthly expiration day. The quarterly results from Hindustan Unilever, which met already low expectations, are not expected to have a significant impact on market mood. On the other hand, Kotak Mahindra Bank’s performance will be closely watched, particularly in light of recent RBI initiatives.

Based on their quarterly results, Axis Bank, LTIMindtree, Dalmia Bharat, and Indian Hotels are among the firms that the market is likely to react against. A number of large-cap firms, including as Bajaj Finance, Tech Mahindra, and Nestle India, are also scheduled to announce their results, which might further impact market sentiment.

Mixed views among market participants were evident in Wednesday’s trade as international investors maintained their selling binge in the cash market while local investors remained net purchasers.

Following the Nifty’s upward trend, the Nifty Bank also had a strong fourth day of growth, finishing over 48,000 for the first time since April 12. Investor attention is still focused on the banking sector, with Axis Bank and Kotak Bank receiving a lot of attention in addition to IndusInd Bank’s quarterly announcement.

When looking at the F&O cues on the eve of expiration, Nifty 50 futures showed a rise in Open Interest of 2.9%, and the percentage of current rollovers was 56%. On the other hand, Nifty Bank futures, which have a 74% rollover rate, saw a 2.9% increase in open interest. Notably, the Put-Call Ratio for the Nifty 50 is 1.04, indicating conflicting opinions among options traders.

As the show comes to an end, Vodafone Idea and Zee Entertainment are released from the F&O ban, but Aditya Birla Fashion & Retail and SAIL are included with Hindustan Copper on the list.

When examining individual strike prices for the April 25 expiration, the 22,300 strike has a decrease in Open Interest while the Nifty 50’s Call side, between 22,450 and 22,550, sees an increase. Strikes between 22,300 and 22,500 on the put side show an increase in open interest, indicating different expectations among traders.

Numerous company announcements and earnings releases might influence market mood as investors prepare for Thursday’s trading day. A list of equities to monitor is provided below:

The Reserve Bank of India (RBI) decision has created uncertainty for Kotak Mahindra Bank, since it imposes limitations on the onboarding of new customers using online and mobile banking services. Furthermore, the RBI found significant shortcomings in the bank’s IT inventory management as well as other compliance-related areas, which resulted in the bank being prohibited from issuing new credit cards. Investors are nonetheless worried about how the bank’s operations would be affected, even though the bank has assured them that steps will be taken to strengthen its IT infrastructure.

Hindustan Unilever: The company’s performance for the March quarter was in line with market expectations, despite reporting a moderate 2% volume rise. The company’s overall performance is seen as meeting rather than surpassing modest expectations, indicating consistency in its core business, even while other measures also meet consensus forecasts.

Axis Bank: Axis Bank surprised experts by reporting a net profit of Rs 7,130 crore, which was more than anticipated. The bank’s asset quality has dropped to its lowest point in more than eight years, raising worries, however. Notably, the bank’s increased Net Interest Margin (NIM) defies projections of a decrease, and its restructured book is at its lowest point in 14 quarters. The bank’s intentions to raise money via debt and stock generate even more questions about how it will develop in the future.

LTIMindtree: LTIMindtree is facing challenges due to dropping Constant Currency sales and recurrent margin contractions, even though the company posted revenue and margin results below projections. A little decrease in deal wins was also seen, especially in North America and Europe, which added to the company’s below-average performance.

Dalmia Bharat: The business revealed a net profit of Rs 320 crore, above market estimates and demonstrating strong financials. But worries about EBITDA and margin misses—which are linked to poor pricing and higher-than-expected expenses—arise. While higher volumes support the business’s success, declining margins cast doubt on long-term development plans.

Syngene: The US biotech industry, in particular, is seeing a decrease in demand for research and development services, as seen by the company’s 7.8% annual revenue decline and 5.5% net profit increase over the previous year. The management is hopeful about a possible rebound despite the obstacles, projecting high-single-digit to low-double-digit revenue growth in the next fiscal year.

AU Small Finance Bank: Reporting a net profit of Rs 370.7 crore and better asset quality, the bank surpasses expectations. The bank’s efforts to lower gross and net non-performing assets (NPA) levels demonstrate tenacity in the face of difficult market circumstances, even if net interest income slightly declined.

Indian Hotels: With development ambitions and a solid cash position, Indian Hotels has seen a considerable improvement in net profit, sales, and EBITDA. The company’s financials are healthy. By 2030, the brand’s strategic expansion plans hope to have 100 hotels in its portfolio, indicating its long-term sustainability and scalability.

Apart from these corporate announcements, Rail Vikas Nigam shows its ongoing commitment to important infrastructure projects by coming in last in a bid of Rs 239 crore for a Southern Railway project.

In the near future, Prateek Agrawal will take over as MD and CEO of Motilal Oswal AMC, while Akhil Chaturvedi will be promoted to Executive Director. ITC shareholders will meet on June 6 to debate a plan of arrangement between ITC and ITC Hotels.

A wave of volatility rocked the world markets on Wednesday and early Thursday, propelled by a mix of dismal tech giant profits and cautious expectations ahead of important economic data that are scheduled for publication later this week.

US stock futures fell on Wednesday night, mirroring the depressing atmosphere on Wall Street. The Dow Jones Industrial Average futures fell 76 points, or 0.2%, while the S&P 500 and Nasdaq 100 futures fell 0.6% and 1%, respectively. Lead by Facebook, Meta Platforms plummeted 15% in after-hours trading as a result of the company’s muted revenue forecast for the next quarter. Similarly, International Business Machines (IBM) fell 8% as a result of missing first-quarter sales projections, adding to the market’s anxiety.

US Treasury rates increased amid market trepidation as investors anticipated important economic data to determine the direction of Federal Reserve policy. The yield on the 10-year Treasury increased by 4.6 basis points to 4.644%, while the yield on the 2-year Treasury increased by 2.4 basis points to 4.929%. A rise in rates put downward pressure on stock prices and increased market uncertainty.

With uncertainty hanging over them, European markets ended the day unsettled. The morning’s advances in the Stoxx 600 index were reversed as IT companies outperformed financial services in the final moments, closing 0.43% down. Amidst wider market turbulence, the UK’s FTSE 100 ended a five-day winning run by finishing slightly down.

Early on Thursday, oil prices fell as a result of worries about a possible US economic slowdown and geopolitical unrest in the Middle East. US West Texas Intermediate oil prices decreased by 7 cents to $82.74 a barrel, while Brent crude futures fell by 9 cents to $86.95 a barrel. Both benchmarks saw minor losses but held steady after losing less than 1% on Wednesday.

After two days of advances, Asian markets took a break, and investor mood was muted ahead of important economic data releases. Investor caution is evident in Japan’s Nikkei 225 and Topix indexes, which fell 1.8% and 1.4%, respectively. Both the small-cap Kosdaq and the Kospi index in South Korea declined, while the Hang Seng index in Hong Kong and the CSI 300 index in China dropped by 0.4% and 0.45%, respectively. Notably, on a national holiday, markets in New Zealand and Australia were closed.