After a three-day lull, the Nifty 50 has staged a smart comeback over the last two trading sessions, gaining nearly 200 points. The index is now back above the mark of 18,300, closing at the highest level in five trading sessions. However, that is also the level where the index has consistently faced resistance recently, as evident from the intraday highs of 18,309, 18,297, 18,218, and 18,335 over the last four sessions.

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Yet, the Nifty 50 has gained 399 points so far in the May F&O series with three more trading sessions to go before the expiry. The index is poised for back-to-back positive F&O series, a trend that has not taken place since October and November last year.

IT stocks continue to do most of the heavy-lifting as TCS and Infosys were among the top point contributors to the Nifty 50 upside on Monday. The Nifty IT index has now gained 1,100 points over the last two trading sessions. Tech Mahindra, Wipro, HCLTech also featured among the top 10 gainers on the Nifty 50 on Monday.

"The futures Open Interest data indicated build-up of fresh long positions," said Ashwin Ramani of SAMCO Securities, who added that the index has bounced of the 23.6 percent retracement level of 18,076 drawn from the March 20 low to the May 15 high. "The level of 18,200 will continue to act as a support for the Nifty 50, while 18,400 will be an immediate resistance."

The Nifty 50 is looking to take the leadership in moving higher despite the underperformance of the Nifty Bank index, which continues to face pressure above the mark of 44,000. The index ended nearly 100 points lower yesterday compared to the Nifty 50's gains of a similar quantum.

The underperformance of the Nifty Bank was led by index heavyweights like ICICI Bank, Axis Bank and HDFC Bank, who all ended lower on Monday. The index has now traded in a narrow range between 43,500 and 44,100 over the last seven trading sessions. Ramani of SAMCO Securities adds that the index has formed a symmetrical triangle-like pattern. "A decisive breakout on either side of the range will provide cues about the Nifty Bank's future direction," he said.

Rupak De of LKP Securities also expects this range of consolidation to continue for the Nifty Bank index as 44,000 - 44,200 will continue to act as a barrier for the index.

The Nifty Bank index continues to face pressure at higher levels near its all-time high and is consolidating in a narrow 600-point range.

As we mentioned earlier, the Nifty IT index has been taking the leadership over the last few trading sessions. The index has gained nearly 3,000 points from the April 17 low of 26,184. Monday's close of 29,007 was the highest for the index since April 10. All 10 stocks of the Nifty IT index ended higher on Monday.

Monday's close of 29,007 for the Nifty IT index is the highest since April 10.

But the question remains that can these moves on the IT index sustain? Especially when there is little visibility on deal wins in financial year 2024 and fears of a slowdown in the US continue to persist.

"At this point in time, if within IT I have to choose, I will prefer largecap versus the midcap. However, if you asked us, we as a house are still underweight IT per se," said Jitendra Arora of ICICI Prudential Life Insurance Co.

"Even though margins may look to improve, but there also we can see that there may be some kind of headwinds which may come because of the lack of growth and also because of some kind of pricing cut, which the companies may have to deliver to their clients in order to get more business," Arora said.

Let us take a look at what the F&O data is indicating:

Nifty 50 On The Call Side For The May 25 Expiry

For this week's weekly and monthly options expiry, the 18,500 strike call of the Nifty 50, along with the 18,550 call has seen Open Interest addition of 24.4 lakh and 19.6 lakh shares respectively. 18,600 call and 18,200 call have also seen addition in Open Interest.

Nifty 50 On The Put Side For The May 25 Expiry

On the downside, significant Open Interest addition has been witnessed between the 18,000 and 18,300 put options. The 18,200 put added the maximum 46.64 lakh shares in Open Interest.

Nifty 50's put-call ratio is back above the mark of 1, currently at 1.21 from 1.01 on Friday.

Stock Enters F&O Ban: Indiabulls Housing Finance

Stocks Out Of F&O Ban: Aditya Birla Fashion and Retail, Balrampur Chini, Delta Corp, GNFC

Stocks Still In F&O Ban: L&T Finance Holdings, Manappuram Finance

Rajesh Bhosale of Angel One believes that the bulls have regained control of the Nifty 50 and the base for the index has now shifted higher to the range of 18,050 - 18,100. "The immediate target on the upside is now between 18,450 - 18,500," he said while advising traders to maintain a positive bias and use dips as a buying opportunity. Support for the Nifty 50 is seen around the 18,200 mark.

What also needs to be seen in today's trading session is whether Adani Group stocks see follow-up buying after Monday's sharp surge. The move on Monday was the best for the group since the Hindenburg Research report was made public late in January. The Adani Group saw its market capitalisation surge past the Rs 10 lakh crore mark, a recovery of 50 percent from the lows of Rs 6.8 lakh crore. Read more on the Adani Group companies in this piece by CNBC-TV18's Yoosef KP.

Here is a look at the stocks that will be reacting to their March quarter results in today's session:

Nifty 50 Reactions: BPCL

Non-Index Reactions: PB Fintech, Borosil Ltd., EIH Ltd, Finolex Industries, Fusion Micro Finance, Indiabulls Housing Finance, Radiant Cash Management Services, Shree Cement, SJVN, Spencers Retail

Here are the companies that will be reporting their March quarter results today:

Nifty 50 Earnings: None

Non-Index Earnings: Ashok Leyland, Biocon, Dixon Technologies, Bajaj Electricals, Bikaji Foods, CMS Info Systems, Fortis Healthcare, NMDC, Dreamfolks Services, Galaxy Surfactants, J Kumar Infra, JSW Energy, Khadim, Sequent Scientific, Thyrocare, Sudarshan Chemicals

Foreign investors returned a buy figure on Monday after a brief pause on Friday. Domestic investors also joined in after buying worth over Rs 600 crore in the cash market.

The uptrend on the Nifty 50 looks set to continue, said Subash Gangandharan of HDFC Securities, adding that once the index crosses the immediate resistance of 18,335, the upside target comes up to the previous swing high of 18,459.

First Published:May 23, 2023 5:00 AM IST