Review of June 3rd

The news that the NDA government is set for a landslide victory, according to exit polls, pushed the Nifty and
Sensex to record highs on 3 June. All 13 sectoral indices posted gains, led by the financial services, oil and gas, and
power sectors. At the close, the Sensex was up 2,507 points, or 3.4 per cent, to close at 76,468.The Nifty 50 was
up 733 points, or 3.3 per cent, to close at 23,263.The BANKNifty was up 1,996 points, or 4.07 per cent, to close at
50,979.95. Around 2,210 stocks gained, 1,310 stocks declined and 103 stocks were flat in the market. In terms of
sector-specific performance, the railways sector rose by 9.25 per cent, other transport sector by 9.20 per cent
and gas distribution sector by 8.49 per cent.

1.Technical side

The BANKNIFTY index saw a stronger higher opening trend today, which had an impact on our forecast. Price
remained above 49424, indicating that the bearish trend is still dominant. Looking at the daily structure, the price
opened with some restorative behaviour and the candlesticks with longer lower leads, showing that after the
release of profit-taking chips, new long forces are still intervening. Overall, the bullish sentiment is more positive.
However, for the overheated market sentiment, we need to focus on the game of long and short forces. Therefore,
you can take the intraday high and low points as the range, to form an average price between the high and low
points as a reference line of strength and weakness to determine the situation of the long and short game.
Today's intraday high of 51133, low of 50092, the strength of the reference line for 50612. Currently the price
closed above 50401, indicating that the bulls are dominant, for the next trading day the continuation of the bulls
is beneficial. Analysing the daily structure, the price closed above the trend track and the upside is open. However,
the large gap in the structure may lead to more chips taking profits, so it is still important to watch out for any
weakening of the bulls to avoid a concentrated run on the market from profit-taking.

For tomorrow's market forecast, 51133 can be used as a reference point. If the opening 30 minutes after the price
closed above the point, on behalf of the continuation of the long market, the market continues to be mainly
bearish; if the price fell below 50092, on behalf of the emergence of the short market, short-term prices may
make up for the shortfall; if the price closed between the two, on behalf of the trend of the high level of
oscillation, at this time, the long side of the opinion is not unanimous. In addition, today's volume has been
enlarged, so tomorrow's volume performance also need to focus on. If the volume continues to enlarge and new
highs, indicating that the market long mood is stable; if the volume shrinks, you need to pay attention to the
length of the upper lead, shrinkage accompanied by a longer upper lead, may indicate that the strength of the
bulls will be weakened.

The NIFTY index saw a big higher open today, but prices did not make new highs after the open. Although there
was some supportive bounce after the price retreated to the previous highs near 23,100, a lone conical line was
formed at the highs. This pattern usually represents a higher likelihood of a short-term top in the market.

From the analysis of today's long and short forces, the short side is currently slightly dominant, while the volume
compared to the previous trading day significantly enlarged, the selling volume of the highs is slightly larger than
the long force of today's intervention. From the daily structure, after the close of the candlestick line of the lower
shadow is longer, indicating that the resistance of the long forces to the short side of the performance is better.
Currently the price is stable above the 23100 defence point, indicating that the bulls still have the possibility to
attack. Overall, both the bulls and the shorts performed today, but the shorts have a slight advantage and there is
no clear direction for the time being.

For tomorrow's market forecast, we have to take 23100 as an important reference point. 23100 is an important
defence point for the bulls, whether or not to hold this point will determine the short-term trend of the market. If
the price fails to hold 23100 within 30 minutes after the open tomorrow, the market may usher in greater
retracement pressure. On the contrary, if the price effectively breaks through the 23338 level, it represents the
dominance of the bulls, and new highs may be seen under the impetus of the market. Between the two is an
oscillating market. Here are the specific ways to judge:
1. If the price holds the 23100 level within 30 minutes after the open and volume continues to enlarge, the bulls
are in a stable mood and the market may continue to rise.
2. If the price fell below the 23100 level within 30 minutes after the opening bell and volume amplification,
short-side sentiment prevails, the market may face a pullback.
3. If the price oscillated between 23100 and 23338 points, it indicates that the market is close to a balance
between the power of the short and long sides, the short term may continue to oscillate and consolidate.
The method of judging the long and short within tomorrow's day can be used in the case of the consolidation
strength reference line, or you can use the above content BANKNIFTY method to judge.
The SENSEX was stronger on the long side than the NIFTY today. After a higher open, the SENSEX continued with
an upside test and an overall retracement followed by a relatively strong rebound. For the analysis of SENSEX
index, we still need to focus on its structural position. Currently, it is still in a long trend as the price has stayed
above the 75124.28 point after the high open, so we can continue to use this point as a reference. As long as
there is no significant change in the structure, the volatility of the SENSEX can be analysed and moved with
reference to the NIFTY index.

2.News
1. Federal Reserve officials said interest rates should remain unchanged for an "extended" period of time, and
the Fed is expected to keep rates at a 23-year high of 5.25 per cent to 5.5 per cent. Keeping Fed rates high
could have indirect effects on the Indian economy. Firstly, high interest rates usually lead to a stronger US
dollar, which attracts more investment into the US, thereby reducing capital inflows into emerging markets
(including India). This could lead to a depreciation of the Indian rupee, increasing the cost of imports,
especially of key commodities such as crude oil, which in turn could push up domestic inflationary pressures.
In addition, the withdrawal of foreign capital could put pressure on India's economic growth, particularly in
areas that are dependent on foreign investment, such as technology and financial services. In a high interest
rate environment, global investors tend to favour safe-haven assets and reduce their exposure to emerging
market equities. This means that the Indian stock market could be at risk of capital outflows, leading to
increased stock market volatility. At the same time, the increased cost of financing for domestic companies
may affect profitability and share price performance. In particular, companies that are highly leveraged and
dependent on borrowing may be more negatively impacted. However, some export-oriented companies
may benefit from the depreciation of the rupee, enhancing their international competitiveness.

2. India's Manufacturing Purchasing Managers' Index (PMI) fell to 57.5 in May from 58.8 in April, which,
despite the slowdown, still indicates that the manufacturing sector is in an expansionary mode, above the
key point of 50 and the long-term average. The slowdown in manufacturing activity could indicate that high
temperatures and rising production costs are having an impact on the economy. Manufacturing is an
important part of the Indian economy and a slowdown could have some dampening effect on the overall
pace of economic growth. However, the strong growth in new export orders indicates resilience in external
demand and may offset the domestic slowdown to some extent. Meanwhile, optimism in the
 manufacturing sector is high, suggesting that the outlook for future growth remains positive. The slowdown
in manufacturing PMI may raise investor concerns about slower growth in India, which could have a
negative impact on the stock market. However, manufacturing activity is still expanding and export orders
are growing strongly, suggesting that increased international demand may help boost the share prices of
some export-oriented companies. In addition, continued strong sales performance and optimistic growth
expectations fuelling job creation have a positive impact on the consumer market and may support the
performance of some consumer stocks. Rising input costs and higher selling prices could compress
corporate margins, especially for those companies that are cost-sensitive, but overall inflation remains
within a manageable range, which would have a limited impact on the stock market overall.

3. India's urban unemployment rate rose slightly during January-March 2024, to 6.7 per cent from 6.5 per cent
in the previous quarter. While the rise in unemployment could have a negative impact on economic growth,
its level is still well below the pre-pandemic peak, signalling a relatively stable job market. The increase in
female labour force participation is a positive sign, although its level is still lower than in Bangladesh.
Increasing female labour force participation contributes to expanding economic output, raising household
income levels and promoting inclusive economic growth. However, unemployment rates vary widely across
regions, which may lead to challenges in resource allocation and policy formulation. Rising urban
unemployment could raise concerns about slowing economic growth, which in turn could affect stock
market investor confidence. However, the unemployment rate remains below the pre-pandemic level,
indicating a generally healthy labour market. The increase in female labour force participation, while still
subject to improvement, has a positive impact on the economy's long-term growth potential and the
expansion of the consumer market. Differences in unemployment rates reflect the diversity of regional
economic conditions, and investors may pay more attention to those regions and sectors with lower
unemployment rates and more vibrant economies. These factors may lead to divergence in stock market
performance and investors need to choose their investment targets carefully.

4. The Unified Payments Interface (UPI) network in India processed a record 14.04 billion transactions in May,
up 49 per cent year-on-year. This significant growth reflects the popularity of digital payments in India's
everyday life, especially in the post-epidemic era when more consumers and businesses are turning to
cashless payment methods.The growth in UPI transactions not only improves the efficiency of payments,
but also promotes financial inclusion, especially in rural and remote areas, and contributes to the overall
vibrancy of the economy. In addition, the increase in volume and value of UPI transactions means more
money flowing through the economy, which helps to increase consumption and investment levels, thereby
contributing to economic growth.The explosive growth in UPI transactions has a positive impact on the
Indian stock market. Firstly, fintech companies and banks will directly benefit from the increase in
transaction volumes, driving up their revenues and profitability. Second, the popularity of UPI has fuelled
the growth of the e-commerce and digital payments industry, driving up the share prices of related tech
companies. Finally, the expansion of UPI in rural areas will further boost economic inclusion and the rural
consumer market, reinforcing investor confidence in the continued growth of the Indian economy. The
combination of these factors is likely to boost overall market sentiment and stock market performance.

5. The National Highways Authority of India (NHAI) has announced a 5 per cent increase in highway tolls from
3 June 2024, an adjustment that is in line with changes in inflation based on the wholesale price index (CPI).
The toll hike will increase the cost of transport, which in turn may push up the prices of goods and services,
putting some pressure on consumer and business spending and potentially leading to higher inflation.
However, the toll increase also finances the maintenance and expansion of the national road network,
which helps to improve transport infrastructure, transport efficiency and mobility of economic activities,
which is beneficial to economic growth in the long run. The increase in motorway tolls may have a direct
impact on transport and logistics-related companies by increasing their operating costs, which may
compress the profit margins of these companies and, in turn, have a negative impact on their share prices.
However, the increase in toll revenues will contribute to the improvement and expansion of highway
infrastructure, which is a positive for infrastructure development companies and may drive their share
prices higher. In addition, with improved transport networks, inter-regional economic activities and trade
will be boosted and overall market confidence may be enhanced, favouring the overall performance of the
stock market.