Indian equity markets continued their northbound journey for the second week, with the Nifty settled above the 17,000 mark on the back of positive cues from supportive global markets, reduced FII selling, recovery in the Indian currency, healthy quarterly earnings and a decent monsoon.
For the week, the BSE Sensex jumped 1,498.02 points (2.67 percent) to end at 57,570.25, while the Nifty50 gained 438.85 points (2.62 percent) to close at 17158.3 levels. In the month of July, both the main indices rose 8.5 percent.
On the sectoral front, the Nifty Metal index added 7.7 percent, Nifty Media index rose 5 percent and the Nifty Information Technology index gained 3.5 percent, in the week ended July 29.
For the week, the Midcap, Smallcap and Largecap indices rose 1.6 percent, 1 percent and 2.5 percent, respectively. In the month of July, Smallcap and Largecap indices added 9 percent each, while the Midcap index rose 10.7 percent.
“We had a soft opening on Monday on the back of sluggish global cues. With some tiny swings on both sides, the index eventually settled around opening levels on the same day. This was followed by yet another weak session and in the process, the Nifty sneaked below the key level of 16500. Fortunately, the table turned completely on Wednesday as we witnessed strong buying emerging at lower levels to reclaim some important levels ahead of the Fed policy announcement, as well as monthly expiry,” said Sameet Chavan, Chief Analyst, Technical and Derivatives, Angel One.
“By delivering the expected 75 bps rate hike, the Fed chairman did not disappoint this time. To add to the cherry on top, the commentary was very much on the dovish side. This development lifted the overall sentiment on the expiry session as we not only witnessed a gap-up opening but also extended the move during the remaining part of the week,” he added.
In the last week, the lowest selloff was from foreign institutional investors (FIIs), as they offloaded only Rs 145.87 crore of equities, while domestic institutional investors (DIIs) bought equities worth of Rs 2,238.51 crore.
In the month of July, FIIs sold equities worth Rs 6,567.71 crore, while DIIs bought equities worth of Rs 10,546.02.
More than 350 small-cap stocks rose between 10-103 percent in the month. PC Jewellers, the Brightcom Group, Sree Rayalaseema, Hi Strength, Lasa Supergenerics, Anant Raj, Bajaj Healthcare, Lumax Auto Technologies, Astra Microwave Products, D-Link India, Navkar Corporation and AGI Greenpac gained 40-103 percent.
On the other hand, Tanla Platforms, Bajaj Hindusthan Sugar, Nazara Technologies, Mangalore Refinery and Petrochemicals, Birla Tyres, Sharda Cropchem, KBC Global, Gayatri Projects, Dhanvarsha Finvest, Khaitan Chemicals and Fertilizers, Dish TV India, Chennai Petroleum Corporation, NIIT, Tata Teleservices (Maharashtra), and Future Retail lost between 10-30 percent.
“Both the Sensex & Nifty gained ~ 2.25 percent over the past week. Nifty has been outperforming its global peers as most global equity indices are trading below their recent support. Global equity markets continued their strong rally on expectations of the US nearing the end of its rate hike cycle. Decent 1QFY23 earnings print for domestic-facing companies also aided market sentiment,” said Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities.
“The US FOMC increased the federal funds rate by 75 bps, and stated that future rate hikes will be dependent on data. FPI outflows stood at $86 mn over the past five trading sessions, while DIIs bought $259 mn in the same period.”
“The market is hoping that slowing growth is going to result in a more dovish Fed moving forward. Investors will get updated looks at inflation and second-quarter employment costs on Friday, which could be key data points for the Fed as it considers its next move. Investors have also been navigating a mixed batch of earnings reports this week,” Chouhan added.
Among mid-caps, Godrej Properties, Oberoi Realty, Canara Bank, Page Industries, PI Industries, Container Corporation of India and Cummins India rose more than 20 percent, in the month of July.
The 9.5 percent surge in the BSE 500 index was supported by the Brightcom Group, Star Health & Allied Insurance, Can Fin Homes, Bajaj Finserv, Ceat, Bajaj Finance, IndusInd Bank, Anupam Rasayan India and Adani Total Gas.
“Bulls continued to dominate domestic markets during the week amid positive global cues. The Fed's 75 basis point rate hike was expected, and their comments dismissing the possibility of a recession and hinting at a slower pace of rate hikes in the coming months boosted global sentiment. As a result, the rupee strengthened, potentially attracting foreign funds into the domestic market,” said Vinod Nair, Head of Research at Geojit Financial services.
“On the domestic front, healthy quarterly numbers provided a cushion of relief. However, concerns over the global economic slowdown lingered as global corporate majors continued their trend of downgrading future estimates.
“Despite weak US GDP data, the global market maintained its strength as the market perceived that aggressive monetary policy will soon come to an end. Domestic investors are now bracing for the RBI's MPC meeting next week, expecting a rate hike of 25-50 basis points,” Nair added.
Where is Nifty50 headed?
Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services:
``All eyes will be on the RBI and BoE (Bank of England) monetary policy meet next week, where investors expect them to soften their aggression a little, following the US Fed. Apart from these, PMI data would be released by both India and the US, along with the US jobless claim data. Next week investors would also look out for the outcome of the OPEC meeting, which might keep oil prices on edge. Overall, we expect the positive momentum to continue in the market, with bouts of volatility. Stock-specific action would continue as the busy results season continues.’’
Sameet Chavan, Chief Analyst, Technical and Derivatives, Angel One:
``As far as the Nifty is concerned, we may see some consolidation going ahead, but the undertone in the broader market would continue to remain strong. For the coming week, 17380 followed by 17450 are the immediate levels to watch out for.
``Although globally we are seeing some relief, we advise traders not to get too complacent. It’s advisable to keep booking timely profits on existing positions at higher levels. The churning within potential movers remains key. The Nifty Midcap50 index crossed its 200-day SMA, and the way some of the midcap counters performed this week, one should look to identify stocks from the cash segments as well.’’
Ruchit Jain, Lead Research, 5paisa.com:
``Near-term support for the index has shifted higher and is now placed around 16930, while the medium-term support base has shifted higher to 16550 and 16420. The only point of caution on the short term charts is the momentum readings, which are again in the overbought zone. However, when in a strong trending move, it is often seen that the upmove continues in the overbought zone as well until any divergences get formed.
``So the data is still positive, and until the index breaches any important supports or witnesses short formations by strong hands, one should not pre-empt any reversal for now. On the higher side, 17300-17400 will be the important resistance zone and hence traders can look to book profits and take money off the table there. Trading with a stock-specific approach and booking profits at higher levels should be the approach to trade the markets in the coming week.’’Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.