Today, the market broke through the level it had been attempting to surpass for the past 7 days and managed to close above it. The market closed around 24,460, which is above the key level of 24,350 we previously discussed. This marks a stronger closing.
However, as mentioned in the previous trade setup, we observed a high hammer candlestick pattern on the daily timeframe. Despite this, in the conclusion section, we also noted that FII and DII data is coming in strong, with significant numbers that could potentially push the market higher—an expectation that has now materialized.
Global Market Analysis
Trump tariffs the movies
Trump has imposed a 100% tariff on movies produced outside the USA, citing concerns that foreign films are harming the Hollywood industry. As a strong measure against this perceived threat, Trump announced that any movie from any country entering the U.S. market will now be subject to a 100% tax.
From India’s perspective, this is a negative development, as the U.S. is a significant market with high per capita income, generating substantial revenue for Indian film producers.
This move could severely impact Indian movie exports. However, the most affected country is likely to be Japan, as it has a strong anime business in the U.S. market, which will now face major setbacks.
Nasdaq 10-day straight gain
As the earnings season for major U.S. tech companies nears its end, the market appears to be gaining strength and showing an upside trend. The NASDAQ has already rallied nearly 21% from its April low, which was around April 7.
Over the past 10 consecutive sessions, the NASDAQ has closed positively, and this upward momentum seems likely to continue. Several factors are contributing to this rally: strong corporate earnings, optimistic deal expectations among Wall Street traders.
Domestic Market Analysis
Pakistan FM threat the India
In the past month, India has continued to uphold the Indus Water Treaty with Pakistan. However, tensions have risen as Pakistan’s foreign ministers have issued threats, warning that if India attempts to divert the water flow or take any steps to reduce the water supply to Pakistan, they may retaliate by targeting Indian dams. These developments are raising serious concerns for both India and Pakistan.
In a hypothetical scenario, if India were to launch a strike on Pakistan, it is likely that Pakistan would respond with a muted counter-strike. Following such an exchange, the situation might temporarily de-escalate. However, the issue of water is likely to remain a prolonged point of conflict between the two nations.
Putin Accepts India’s Invitation Amid Rising Tensions
Putin has accepted India’s invitation to visit in the near future, at a time when tensions between India and Pakistan are on the rise. He also condemned the recent terror attack in Kashmir, which adds further pressure on Pakistan and strengthens India’s stance on the issue.
FII&DII Activity
FII is showing a clear positive trend in the Indian stock market, as they bought nearly 500 crore rupees in the May 5th trade setup. Additionally, DAY contributed to further gains in Nifty by purchasing 2788.68 crore rupees in Monday’s trade setup.
Both are contributing to buying activity in Indian equities, which could potentially lead to more gains in the future. This consistent buying trend is significant as FII has been a net buyer in the Indian market. The key takeaway is not just the individual buying amounts, which range from 2000 to 3000 crore rupees, but the sustained buying momentum, which is an important factor for the market.
Nifty Outlook for tomorrow trade setup
Nifty is showing a bullish mood, making new highs each day. However, after reaching those higher levels, it struggles to sustain them and often ends the day with just a modest close. On the May 2nd trade setup, a hammer pattern was observed, which initially acted as a resistance. However, in today’s trade setup, Nifty50 managed to close above that resistance level of 24,350, which has now turned into a support level.
Tomorrow’s trade session will be crucial as this support level is likely to be tested. Another key level to watch is the high made on May 2nd at 24,589 — nearly 24,600 — which now stands as a significant resistance. Nifty may face some hurdles around this level.
However, with the positive sentiment seen in both FII and DII activity, Nifty may continue to show strength. This may create some uncertainty for both bulls and bears. As a result, we can expect a trading range between the support at 24,250 and the resistance at 24,600 in the upcoming session.
Conclusion
The foreign movie tax is not expected to have much impact on the market. While tensions between India and Pakistan are influencing ground-level sentiment, the market is largely ignoring the situation for now, unless concrete action is taken by either country. Until then, Indian equities are unlikely to reflect any major reaction.
Regarding Nifty 50, the hammer pattern seen in the May 2nd trade setup continues to act as a hurdle around the 24,600 level. However, with consistent FII and DII buying, there is potential for Nifty to move higher. Tomorrow’s session is expected to be a tough battle between buyers and sellers.
For now, the 24,600 level remains a significant resistance point. Closing above it this week may prove challenging, and we may see Nifty facing continued resistance at that level before it can break higher.
