Day of consolidation for indices; stay cautious at higher levels

It was a day of consolidation for Indian markets on May 28 but the indices managed to hit a fresh record closing high amid volatility. The S&P BSE Sensex recouped losses and closed above 39,700 while the Nifty50 held on to 11,900 level.

The final tally on D-Street – the S&P BSE Sensex rose 66 points to 39,749 while the Nifty50 closed just 4 points higher at 11,928.

Banking stocks witnessed profit taking. The Nifty Bank bounced back over 269 points from its intraday low to close 49 points lower at 31,597, weighed down by losses in PNB, Kotak Bank, Bank of Baroda and IDFC First Bank.

Apart from banking names, telecom, auto, capital goods and consumer durable sectors witnessed profit taking. On the other hand, buying was seen in IT, metals, energy and oil & gas stocks.

The S&P BSE Midcap index rose 0.09 percent while the S&P BSE Smallcap index gained 0.41 percent, compared to 0.17 percent rise seen in the S&P BSE Sensex.

The India Volatility Index (India VIX) rose marginally by 0.18 percent to 16.22 ahead of F&O expiry on May 30. Experts advise investors to remain cautious at higher levels towards 12,000 that could witness selling pressure.

Technically, the Nifty50 made a fresh record closing high but it reversed gains around 11,958 on that was similar to intraday high of 11,957 on May 27.

The focus will now shift to May F&O expiry and the macro front GDP data for Q4 and Infrastructure output data on that will be out on May 31, which could dictate the near-term trend for the markets.

“While the market gains could extend in the coming sessions, we prefer to remain cautious at higher levels. Indian benchmark indices are trading near peak valuations and at a meaningful premium to other emerging markets, which warrants some caution,” Jayant Manglik, President – Retail Distribution, Religare Broking Ltd told .

“For premium valuations to sustain, corporate earnings revival is crucial. However, earnings this quarter have been a mixed bag. Further, domestic macro data like Q4 GDP data and infrastructure output (scheduled this week) and RBI’s monetary policy (on June 6) will dictate market trend in the coming weeks,” he said.

Manglik further added that global developments, especially progress on US-China trade talks will also induce high volatility.

Stocks in news:

Zee Entertainment Enterprises’ fourth-quarter net profit increased 26.8 percent to Rs 292.5 crore, beating analyst estimates on every parameter. The stock rose nearly 6 percent even though some brokerage firms reduced their respective target price for the stock.

PNB slipped over 3 percent after the state-owned lender reported Q4 loss of Rs 4,750 crore. High slippages weighed on the stock. Fresh slippages at the end of March quarter doubled to Rs 6,710 crore against Rs 3,324 crore in Q3FY19.

Shares of Yes Bank rallied 4 percent on reports that the private lender was planning to exit its asset management business.

Adani Gas shares surged more than 14 percent after the company almost doubled its net profit in the March quarter on the back of higher sales.

Global update:

European markets were trading higher as investors kept an eye on the political developments.

Asian markets ended higher after US President Donald Trump’s visit to Japan. Nikkei rose 0.37 percent at 21,260.14, while Kospi added 0.23 percent at 2,048.83. Shanghai Composite added 0.61 percent at 2,909.91.