Trade Setup for April 26: Nifty aims for weekly gains, new peaks despite choppy global cues

The Nifty has ended the April F&O series on a high. The index eventually ended the series with gains of over 200 points after a topsy-turvy month. After making a record high of 22,775 on April 10, the Nifty shed 1,000 points come April 19 to make its recent swing low of 21,777. Since then, it has already clawed back 80% of that 1,000-point drop by the end of the series.

April also turned out to be the third straight positive series for the Nifty. It is now just 220 points away from its previous record high. The index has also gained for five straight sessions, a feat achieved for the first time in over two months. For the week, the Nifty is already up 1.8%, managing to recover all that it lost in the previous week and gain some more post that.

However, global cues may turn out to be a dampener considering how the US markets have fared so far.

Friday will see voting for the second phase of the Lok Sabha polls take place, where voters of 89 constituencies across 13 states will exercise their franchise.

Earnings reactions will also continue with stocks like Tech Mahindra, IndusInd Bank, Bajaj Finance, L&T Technology services among others react to their quarterly numbers which were reported after market hours on Thursday.

Among the Nifty constituents, HCLTech and Maruti will be reporting results on Friday, while within the broader markets, stocks like Mahindra Holidays, Bank of Maharashtra, SBI Life, CSB Bank, Motilal Oswal will be reporting results. Motilal Oswal will also be considering a proposal to issue bonus shares.

Domestic institutions were heavy buyers in the cash market on Thursday, but foreign institutions continued to remain net sellers.

The Nifty crossing the mark of 22,500 on expiry day is hinting at a resumption of the momentum, said Ruchit Jain of 5paisa.com. The RSI Oscillator on the daily chart is on the verge of a positive crossover and follow-up buying on Friday may take the index back to new highs. 22,300 and 22,230 on the downside are seen as immediate support zones.

Nagaraj Shetti of HDFC Securities believes that the Nifty’s short-term uptrend appears to have resumed after a small pause. He sees levels of 22,800 and above on the index soon. Immediate downside support is at 22,470.

LKP Securities’ Rupak De said that the Nifty continues to remain above the 21-Day Exponential Moving Average, which is key and the RSI is also showing a bullish crossover, indicating positive momentum. He sees upside potential for the Nifty ranging from 22,750 – 22,800 levels, while 22,450 will act as a support on the downside.

Despite Kotak Mahindra Bank turning out to be a major drag, the Nifty Bank managed an impressive 300-point gain on Thursday, as the losses from Kotak were offset by other heavyweights like SBI, ICICI Bank and were led by Axis Bank, which gained over 5% post its quarterly results. The Nifty Bank closed near the mark of 48,500 for the first time after April 12.

For the week, the Nifty Bank is up 1.9% and has nearly recovered all the losses it made last week, which it will,  once it crosses the level of 48,564.

Neeraj Sharma of Asit C Mehta Investment Intermediates said that the Nifty Bank is on the verge of sustaining levels of 48,500. If that happens, the index may rally towards levels of 49,000 and 49,500. Short-term support levels are seen at 48,000 and 47,000 for the index, while the 49,000 level may act as a resistance.

The Nifty Bank’s Middle Bollinger Band, near levels of 47,800 now provides strong support to the index, said Om Mehra of SAMCO Securities. He expects a combination of PSU and Private Banking stocks to lead the index towards the mark of 50,000 in the coming sessions.

What Are The F&O Cues Indicating?

For the May series, these stocks saw addition of fresh long positions on Thursday, meaning an increase in both price and Open Interest.

Stock	Price Change	OI Change
Zee Entertainment	1.69%	2,080%
Vodafone Idea	8.14%	212.40%
Sun TV	2.18%	59.42%
GMR Airports	3.73%	51.77%
IDFC	0.36%	42.58%

These stocks saw addition of fresh short positions on Thursday for the May series, meaning a decline in price but increase in Open Interest:

Stock	Price Change	OI Change
Ramco Cements	-2.55%	83.86%
Kotak Mahindra Bank	-10.81%	53.20%
Laurus Labs	-2.22%	46.16%
Indian Hotels	-5.16%	43.80%
India Cements	-0.15%	34.23%

These are the stocks to watch ahead of Friday’s trading session:

• IndusInd Bank: Net Interest Income of ₹5,376.5 crore, marginally lower than poll of ₹5,483.8 crore. Net profit of ₹2,349.1 crore, meets estimates of ₹2,322.7 crore. Gross NPA and Net NPA unchanged from December quarter at 1.92% and 0.57% respectively. Recoveries at ₹363 crore from ₹565 crore last year. Write-offs at ₹502 crore from ₹711 crore last year. Net Interest Margin of 4.26% is at a six-quarter low. Cost-to-Income ratio at 48.23% from 44.83% last year, worst in eight or more years.
• Bajaj Finance: Aims to add 12-14 million new customers in financial year 2025. AUM growth remains on track between 26% and 28%. NIM may decline by 30-40 basis points in the first half of financial year 2025. Cost of funds to peak by July-August, 2024. RoE in the short-term may be marginally lower than the long-term guidance. Cautiously optimistic about financial year 2025 with profit growth to be more rear ended due to drop in NIMs. Both net profit and Net Interest Income for the March quarter was below expectations. Gross NPA at 0.85% vs 0.95%. Net NPA unchanged at 0.37%.
• Tech Mahindra: US Dollar revenue down 1.6% to $1,548 million, in-line with expectations. Constant Currency revenue down 0.8% sequentially, drops for third out of last four quarters. Deal wins at $500 million. CEO Mohit Joshi said financial year 2025 will be better than the year gone by.
• L&T Technology Services: Constant Currency revenue growth of 5.1%, higher than the estimate of 4.8%. EBIT margin though at 16.9%, lower than estimate of 17.2%. Guidance for financial year 2025 seen at 8-10% revenue growth, also lower than estimates.
• Tata Motors: Voting on merger proposal with Tata Motors DVR to begin on April 25.
• Tata Steel: To proceed with a 1.25 billion pounds investment to build an electric arc furnace in Port Talbot. Two blast furnaces at Port Talbot will close by the end of June and September respectively. A voluntary redundancy aspiration process will be launched across Tata Steel UK from May 15. Final documents will be executed in the coming weeks.
• Vodafone Idea: NSE and BSE sees combined delivery of ₹7,500 crore on Thursday, compared to FPO size of ₹18,000 crore.