Closing Bell: Sensex, Nifty end flat; mid, smallcaps outperform

The equity markets trended higher for major part of the week, barring a flattish closing on the last trading session of the week. The market strength was well supported by IT, Metal and Pharma stocks. The healthy set of earning numbers from IT majors buoyed sentiments. Even as the FIIs remained net sellers, the markets received support from DIIs.

Overall the sentiment is positive as there has been a robust start to the earnings season by the IT companies. For the coming week as well the focus would remain on earnings and this factor may dictate the market direction. On the global front the factors to monitor would be macro-economic data coming out of US, such as Housing Starts and Jobless claims.

Tatva Chintan Pharma Chem's initial public offering saw strong demand, as the IPO was fully subscribed in the initial hour of bidding on the first day itself. Another big-bang opening for an IPO this week as Zomato's public offer, too, draws an enthusiastic response.

The offer was subscribed 4.36 times on July 16 so far, as investors put in bids for 1.42 crore equity shares against the IPO size of 32.61 lakh equity shares, data available on the exchanges showed.

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The last two weeks have seen volatility compress in USD-INR. In fact, the intra-week price range in USD-INR was lowest since early August 2020. On one hand, RBI was rumored to have been buying quite aggressively under 74.50 on spot but on the other hand, record FPI flows in the Zomato IPO and FDI inflows did not let USD-INR move above 74.65 levels.

Volatility expansion is natural once USD-INR gets coiled in a low volatile range for some time. With the FPIs shying away from the secondary market and IPO season entering a lull, USDINR may converge to a higher US Dollar Index. A Bit of risk-off is needed in equity markets to trigger a move towards 75.00 levels in the coming days.

Cement demand got impacted during April-May 2021 period, due to business restriction imposed by several states in the wake of second wave of Covid. However, sustained demand from infrastructure sector and continued production unlike last year have helped the cement companies to report strong YoY growth in cement volumes. We are bullish on the cement sector due to strong demand environment, which will drive future earnings of the cement companies. Our top pick in the sector include UltraTech Cement.

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Market traded lacklustre and ended almost unchanged, taking a breather after the recent up move. The benchmark opened marginally in the green however profit booking in heavyweights from the banking and IT pack dragged the indices lower. However, buying in pharma, realty and metal majors helped the index to pare the intraday losses and end flat. Eventually, the Nifty closed at 15,923 levels. Meanwhile, the outperformance continued from the broader indices which kept the traders busy.

We reiterate our positive yet cautious stance on the market and suggest using dips to add quality stocks. In absence of any major event, we suggest keeping a close watch on earnings and performance of the global markets for cues.

: It appears to be the day of consolidation on the bourses as Nifty remained in a narrow range of 80 points by depicting a Hanging Man kind of candle where as a small bullish candle with 318 point range is registered on the Weekly charts. Despite this kind of lacklustre move it still looks advantageous to the bulls at this point in time as Nifty managed to sustain above 15900 levels where as current breakout can be deemed to fail if Nifty closes below 15850 levels. In that scenario again the indices may slip into consolidation phase with negative bias.

Contrary to this sustaining above 15900 levels a higher target into the zone of 16200 – 300 can be expected. Though price chart is bullishly biased technical oscillator/indicator set up has not yet improved in favor of bulls. Hence, index traders are advised to remain cautiously optimistic by maintaining a stop below 15850 levels.

The market witnessed some lackluster movement and an attempt to hold the support level around the Nifty 50 Index level of 15900 While sustaining above 15900 is the key factor from a short-term perspective, maintaining above this level is important for the market to gain momentum and extend the rally until 16200. The momentum indicators like RSI and MACD to stay positive and market breadth to improve, further strengthening a short-term bullish outlook.

Rupee traded in a narrow range between 74.50-74.60 on back of inline import/export trade balance numbers, also sideways trade in dollar index prices near $92.55 due to US jobless data were inline on expectations kept both dollar & rupee in range. Going ahead range for rupee can be seen between 74.45-74.75 in sessions ahead.

LIC raises stake to 3.46 percent in Q1 FY22 from 1.91 percent in Q4 FY21.

The market witnessed some lackluster movement and an attempt to hold the support level around 15,900. Sustaining above 15,900 is the key factor to gain momentum and extend the rally to 16,200.

Market benchmarks the Sensex and the Nifty ended flat after a choppy trade. Sensex closed 19 points, or 0.04 percent, lower at 53,140.06 while the Nifty finished flat at 15,923.40.

BSE Midcap and samallcap indices closed 0.45 percent and 0.38 percent higher, respectively.

Among the sectors, Nifty Pharma, realty and metal indices rose over a percent each while Nifty IT fell over a percent.