Trade Setup for May 5: Nifty bulls on edge as global cues stabilize

The Nifty 50 index has experienced a minimal cumulative gain of just 18 points over the last three sessions, with bulls hesitant to push the index higher but ensuring it doesn't dip either. Every dip is being quickly bought into, reflecting the indecision in the market.

While global cues, which had previously caused volatility, are beginning to stabilize, no substantial progress has been made on the US President Donald Trump's reciprocal tariff talks. Although India remains a leading candidate for a deal with the Trump administration, the timeline for such an agreement remains uncertain.

Last week, the Nifty remained within a narrow 600-point range, with ongoing tensions at the India-Pakistan border and persistent concerns, despite positive factors such as falling crude oil prices and a stronger rupee. The benchmark index has struggled to break beyond this range, ending the week nearly unchanged.

Last Friday, even though the Nifty hit a high of 24,589, it failed to sustain those levels, eventually closing near its Wednesday level.

On the global front, Wall Street wrapped up its most significant winning streak in two decades. Strong earnings from major tech companies and better-than-expected non-farm payroll data added pressure on the US Federal Reserve to cut interest rates. Investors will be keenly watching the FOMC’s policy outcome in the upcoming week.

On the domestic front, the Nifty Bank will remain in focus, with major constituents such as State Bank of India (SBI) and Kotak Mahindra Bank reacting to their quarterly results, which were reported over the weekend. Other stocks like Netweb Technologies, CDSL, Utkarsh Small Finance Bank, Indian Bank, and Avenue Supermarts will also be under the microscope as they react to their earnings.

On Monday, watch for updates from companies like Mahindra & Mahindra, DCM Shriram, CAMS, CCL Products, Coforge, Prataap Snacks, and OneSource Specialty Pharma.

Additionally, pay attention to the follow-up moves in JSW Steel, which was the top Nifty loser on Friday after the Supreme Court ruled its six-year-old Bhushan Power and Steel resolution plan illegal, triggering a significant drop in the stock.

Analysts have mixed views on the Nifty's trajectory. Nagaraj Shetti of HDFC Securities suggests using any dips as buying opportunities. A decisive move above the 24,500-24,600 levels could trigger further upside toward 24,800-25,000, while any downside may find support near 24,000-23,800.

Kotak Securities' Amol Athawale sees 24,200 as a firm support level for the Nifty. If the index stays above this, it could rise towards 24,600-24,800, but slipping below 24,200 might push it down to 24,050 or even 23,900.

Dhupesh Dhameja of SAMCO Securities maintains a positive medium-term outlook for the Nifty Bank, as long as the index stays above the 54,000-54,300 range. A breakthrough above 56,000 could pave the way toward 56,500, while a drop below 55,000 could drag it to 54,300 levels.