Indian equity market regained the lost momentum and rose 3 percent during the week ended July 8, tracking positive global cues, good monsoon, reduced FIIs selling and falling commodities prices.
For the week gone by, BSE Sensex advanced 1,573.91 points (2.97 percent) to close at 54,481.84, while the Nifty50 climbed 468.55 points (2.97 percent) to settle at 16,220.6 levels.
All the sectoral indices on the BSE ended in the green with BSE Consumer Durables index closing 6.5 percent higher followed by BSE Capital Goods index ending 6 percent higher. BSE FMCG settled 5.4 percent up, while and BSE Realty added 5 percent.
Among broader indices - BSE Small-cap, Mid-cap, and Large-cap indices rose 3 percent each.
"During the week, the domestic market saw a bull run, led by consolidation in commodity prices, and reduced FII selling. Crude prices fell over recessionary fears. However, the fall has boosted the appetite for consumption, chemicals, logistics and OMCs as it will reduce the cost burden of these sectors,” said Vinod Nair, Head of Research at Geojit Financial services.
“Falling crude prices will calm inflationary fears, reducing the burden on central banks to raise interest rates aggressively at upcoming meetings. Positive domestic macro and business data by banks were the other major factors that helped in boosting market sentiment,” Nair added.
“Currently, investors are preferring value than growth stocks, resulting in selling across sectors like IT. Defensive sectors like FMCG can perform better due to strong cash flow, high governance, dividend policy and stable earnings growth. As we step towards the new earnings season, quarterly announcements will be the prime focus of the market with an eye on the updated guidance of 2023 financial year," he explained.
After over a month, the foreign institutional investors (FIIs) turned buyers on Thursday but remained net seller for the week as they offloaded equities worth Rs 2218.38 crore. However, domestic institutional investors (DIIs) purchased equities worth of Rs 3910.33 crore during the week gone by.
During the last week, 69 smallcap stocks rose between 10-37 percent, with Himadri Speciality Chemical, PC Jeweller, Brightcom Group, Steel Exchange India, Sobha, Tarsons Products, Ceat, Ajmera Realty and Infra India, Titagarh Wagons, DB Realty, Butterfly Gandhimathi Appliances, AMI Organics, Alembic, 63 Moons Technologies and TCPL Packaging gaining over 15 percent each.
On the other hand, Yaari Digital Integrated Services, Mangalore Refinery and Petrochemicals, Gravita India, Chennai Petroleum Corporation, Vijaya Diagnostic Centre fell over 10 percent each.
“The short-term structure seems bullish as the index managed to reclaim the psychological level convincingly. Also, the way the broader market has behaved towards the fag end of the week certainly augurs well for the bulls. Now since we are relatively in a safer terrain, 16000 – 15900 should now be seen as a strong support zone for the coming week; whereas on the flip side, 16350 – 16430 are the next levels to watch out for as the higher range coincides with the ’89-EMA’ on the daily time frame chart,” said Sameet Chavan, Chief Analyst-Technical and Derivatives, Angel One.
"If the global market supports then we may even go beyond 16430, which will trigger the next leg of the rally for our market participants. Until then although we remain sanguine, by no means one should become complacent here. It’s better to adopt a ‘One step at a time’ strategy and should look to book timely profits wherever it’s necessary as far as momentum trades are concerned.”
“This week lot of thematic moves played out well and some may continue to do so in the forthcoming week. But now one needs to be very selective and should also focus on the broader market, which is likely to provide better trading opportunities as compared to key indices,” Chavan added.
Among midcaps, Canara Bank, ABB India, Mahindra & Mahindra Financial Services, Emami, Container Corporation of India, Cummins India, Honeywell Automation, United Breweries and Oberoi Realty were the top gainers. On the other hand, Oil India, Ajanta Pharma, Gland Pharma, Rajesh Exports and Nuvoco Vistas Corporation were among laggards.
BSE 500 index rose 3 percent led by Brightcom Group, Sobha, Ceat, Avenue Supermarts, Canara Bank and Tube Investments of India, ABB India, G R Infraprojects and Star Health & Allied Insurance Company.
“Nifty has recovered 7% from its recent low of 15183 levels as fall in crude and commodity prices provided some relief to the market. Even Nifty valuation at around 17.5x one-year forward PE has turned attractive which led to value buying in several index heavy weights,” said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services.
“Healthy monsoon progress, lower intensity of FII selling and robust macro data points like GST collection, services PMI data, have turned the sentiments positive.”
“Going ahead, market will now track earnings season which begins on Friday with the release of TCS results. Impact of inflation on corporate earnings and management commentaries would be the key monitorables this results season. Market would also take cues from the macro data like GDP, CPI, Inflation and IIP data both on the domestic and global front that will be released next week,” Khemka added.
Where is Nifty50 headed?
Apurva Sheth, Head of Market Perspectives, Samco Securities:
The coming week is going to test the market in a number of ways as a multitude of important events are lined up. The USA’s much-anticipated inflation numbers, Producer Price Index (PPI), and the jobless claims data will keep the global markets on their toes.
The inflationary problem is not just restricted to the west thus the Indian inflation numbers that are set to release will keep the markets back home busy.
The Retail inflation eased to 7.04% in May versus 7.79% in April, whether the declining trend continues or not is something that is keenly awaited. Aside from macro data, quarterly results will influence market sentiment. The management commentary on future earnings growth trajectory will be of interest to D-street.
With a slew of important events coming up, investors are advised to be careful and cautious in their investment decisions.
In the short term, Nifty may face stiff resistance around 16,200 levels. If it maintains above that level, the next obstacle could be around 16,500 levels. On the downside, 16,000 will serve as a strong support level.
Ruchit Jain, Lead Research, 5paisa.com:
We expect the Nifty to continue its upmove in the short term towards 16550-16650. On the flipside, the support base is shifting higher with the index upmove and the support has now shifted to 16000-15900 range.
Even the option writers have built positions in 16000 strike which hints this to be an important support. In the coming week, small corrections for one to two sessions cannot be ruled out but any such corrections should be used as a buying opportunity.
Ajit Mishra, VP - Research, Religare Broking
Markets will first react to TCS and D-mart numbers in early trades on Monday. Indications are in favor of further rebound in the index with some intermediate pause.
The Nifty has the potential to test 16,500 levels and the 15900-16000 zone would act as a cushion, in case of any dip. Apart from the earnings, global cues will remain on the market’s radar. Amid all, we suggest maintaining stock-specific trading approach and focusing more on overnight risk management.
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