Trade Setup for May 14: Nifty in buy-on-dips mode, directional cues awaited

The Nifty experienced a pullback after a strong rally at the start of the week, with traders booking short-term profits. Despite this, market sentiment is expected to remain positive in the near term, analysts say, as the recent correction follows a sharp upward move.

After an early peak at 24,973, the Nifty dropped over 400 points, closing at 24,578—down by 346 points. Midcap stocks, however, continued to outperform, with the Midcap Index finishing higher despite a 1% decline in the Nifty.

Sector performance varied, with Media, PSU Banks, and Pharma stocks leading the charge, while Nifty IT, FMCG, and Auto sectors saw the biggest losses. Defence stocks saw significant buying interest following Prime Minister Narendra Modi's ‘Made in India’ comment. Stocks like BEL reached record highs, while drone manufacturer Zentech hit the 5% upper circuit for the third consecutive day. Other defence-related stocks, such as Bharat Dynamics and Hindustan Aeronautics, also posted gains.

On the downside, UPL emerged as the top midcap loser, falling by 5% on below-expectation guidance for FY26. The company has projected revenue growth of 4-8% and EBITDA growth of 10-14% for the new financial year.

Shares of Swiggy also dipped by 5%, following the end of its shareholder lock-in period. This allowed 189.8 crore shares to become eligible for trading, constituting 85% of the company’s total outstanding equity.

Tata Motors ended 1% lower ahead of its quarterly results. The company reported a net profit of ₹8,470 crore, revenue of ₹1.19 lakh crore, and an EBITDA of ₹16,992 crore, with an EBITDA margin of 14.2%.

Looking ahead, market attention will shift to earnings reports from companies like Hindustan Aeronautics, Eicher Motors, Apollo Tyres, Berger Paints India, and Torrent Power. Stocks such as Tata Motors and Bharti Airtel, which reported Q4 results after market hours, will also be in focus.

Analysts remain optimistic about the short-term trend. Nagaraj Shetti from HDFC Securities expects the Nifty to bounce back from crucial support levels around 24,500–24,400 in the next few sessions, with resistance at 24,800.

Rupak De from LKP Securities noted that while the Nifty saw some profit-taking, sentiment remains positive. The index continues to trade above its short-term moving average, confirming the bullish trend. De added that the Nifty may continue its upward movement with the potential to reach 25,350, while support is seen at 24,400. A buy-on-dips strategy remains favorable as long as the index stays above this level.

The Nifty Bank Index closed at 54,940.85, down 0.80%. However, it continues to trade above key moving averages, signaling that the broader uptrend is intact. Om Mehra from SAMCO Securities explained that the recent correction is likely a mean reversion, with the Nifty Bank facing resistance near the upper Bollinger Band on the daily chart. He added that support is at the hourly Supertrend around 54,550, and the current decline appears to be a consolidation phase rather than a trend reversal.