Trade Setup for May 7: Nifty range-bound; Markets nervous ahead of Fed decision

The Nifty 50 struggled to hold on to its early gains on May 6, closing near the day's low with a loss of 82 points at 24,380. Although the session began on a positive note due to strong global cues, profit booking at higher levels led to a choppy, downward-biased trading day.

Broader market indices took a bigger hit — the Nifty Midcap 100 dropped 2.27% and the Smallcap 100 fell 2.5%. Over 30 Nifty stocks ended in the red, with losses as deep as 4% in some counters. Sector-wise, only the Nifty Auto index stayed afloat, while PSU Banks, Realty, Oil & Gas, and Pharma stocks dragged the market lower.

PSU bank stocks tumbled following disappointing March quarter results from Bank of Baroda. The Nifty PSU Bank index plunged 5%, marking its sharpest single-day fall since June 4, 2024.

Pharma shares also came under pressure after US President Donald Trump signed an executive order to boost domestic drug manufacturing, weighing on Indian exporters.

On the global front, markets are eyeing the US Federal Reserve’s policy decision on Wednesday. The Fed is widely expected to keep rates unchanged, with only a slim 2.7% chance of a rate cut, according to Fed Funds futures.

Adding to the uncertainty, rising geopolitical tensions between India and Pakistan are also dampening investor sentiment. Security drills will begin across 244 locations starting May 7, keeping traders cautious.

Despite the choppiness, foreign institutional investors (FIIs) were net buyers on Tuesday, while domestic institutions booked profits.

Key Technical Levels to Watch

Immediate support: 24,200

Crucial support: 24,000–23,800 (aligned with 200-day simple moving average and previous breakout zone)

Resistance: 24,550–24,600

Experts suggest that a breakout above 24,600 could revive bullish momentum, while a fall below 24,200 might trigger a short-term correction.

Stocks to Watch on May 7

BSE Ltd: Reported a sharp jump in Q4 net profit to ₹494 crore (vs ₹107 crore YoY); revenue rose to ₹846.6 crore. The board declared a ₹23 dividend, including a ₹5 special payout.

Godrej Consumer Products: Posted a profit of ₹412 crore for Q4, bouncing back from a ₹1,893 crore loss last year, thanks to a significant drop in exceptional items.

Mahanagar Gas (MGL): Delivered better-than-expected March quarter results, beating estimates on net profit, revenue, and EBITDA.

GMDC: Signed a long-term agreement with City Gold Pipes to supply 150 million tonnes of limestone over 40 years from its Lakhpat Punrajpur Mine in Kutch.