Closing Bell: Nifty ends above 16,700, Sensex gains 390 pts led by financials; IT drags

Markets ended on a bullish note for the 6th day in a row, as jubilant investors took heart from this week’s signs that the foreign funds (FIIs) have trickled back into Indian stock markets. FIIs have been net buyers on all the trading days of this week. Stabilizing oil prices near the $97 a barrel mark were the key positive catalysts, while the recent declines in the dollar also brought some reprieve for emerging markets like India.

Technically speaking, any close above Nifty’s 200 DMA at 17051 will confirm strength in the up-move. On the downside, the Nifty has support at 16571 mark, and in case the intra-day support of 16571 collapses, the index will support at the psychological 16250 mark.

Markets extended gains and rose over half a percent, in continuation of the prevailing trend. After the initial uptick, the benchmark oscillated in the range but finally settled around the day’s high. Gains in banking, realty and auto supported the surge while IT, pharma and energy witnessed profit taking. Meanwhile, the broader indices traded mixed. Amongst the benchmark, the Nifty ended with gains of 0.7% to close at 16,730 levels.

Markets will first react to the results of heavyweights like Reliance, ICICI Bank, Infosys and Kotak Bank in early trades on Monday. Besides, the development on the global front over the weekend will remain on the radar. We recommend continuing with a positive yet cautious stance and focusing more on identifying stocks amid the rotational buying.

Falling crude oil prices and rebound in FII inflows into the domestic market helped benchmark Sensex to close above the psychological level of 56000. The fear of aggressive rate hikes by both the US Fed and RBI seems to be moderating, which is giving investors some room to lap up stocks of companies with good fundamentals.

Extending the rally for the sixth straight session, investors bought banking and select automobile stocks. During the week, the Nifty successfully cleared the short term resistance of 16300 and also cleared the 100-day SMA. For traders, 16800 and 16950 would act as an immediate resistance zone, while 16500-16350 could be the key support levels.

Nifty closed the week with a long candle and it is a good quality green candle coming off a major support. Nifty has moved above its 20 week SMA and MACD has moved above its trigger line. This is a major buy signal on the weekly charts.

On the daily, we see a slow stuttering rally in last 2 days. Nifty is extended far away from moving averages and the current move is extended. Also Nifty is around its resistance zone of 16800-16850.

Nifty is in a buy mode on the weekly and extended on daily. There could be some sideways movement and there could be a short-term corrective decline on the horizon. Support for Nifty is at 16500. Any declines in Nifty will take a halt between 16500-16550. If Nifty holds and moves above 16600 there should be more upside to 16700-16750 going into the last week of July Expiry.

Increased foreign investment and solid quarterly results are increasing domestic demand. Among broad-based buying, banking stocks outshined due to healthy quarterly earnings.

European markets traded with modest gains, while investors digested the latest ECB monetary policy as it joined the global peers in policy tightening.

Nifty has been moving higher while remaining around the upper band of the rising channel on the daily timeframe. The trend remains positive; however, the proximity to the resistance level attracts selling pressure in the market. Over the short term, the Nifty may witness a consolidation. On the lower end, support is visible at 16500; while resistance is likely to be there at 16750-16800.

Indian rupee ended 10 paise higher at 79.85 per dollar against previous close of 79.95 per dollar.

Benchmark indices ended higher for the sixth day in a row with Nifty closing above 16700 and Sensex above 56000.

At close, the Sensex was up 390.28 points or 0.70% at 56,072.23, and the Nifty was up 114.20 points or 0.69% at 16,719.50. About 1732 shares have advanced, 1511 shares declined, and 143 shares are unchanged.

UltraTech Cement, Grasim Industries, UPL, HDFC and HDFC Bank were among the top Nifty gainers, while losers included Tata Consumer Products, Infosys, NTPC, Power Grid Corporation and JSW Steel.

Among sectors, bank index gained 1 percent, while power and IT indices shed 0.5-1 percent.

BSE midcap index ended in the red, while smallcap index ended marginally higher.

Indian rupee remained flat today. Surge in domestic markets, FII inflows and softening crude oil prices supported Rupee. However, positive Dollar capped sharp gains. Dollar gained today on improved safe haven appeal amid concerns over recession and disappointing PMI data from Europe.

We expect Rupee to trade on a mixed to negative note on strong Dollar and concerns over inflation and rising twin deficits. Dollar is also expected to recover from lower levels ahead of FOMC meeting next week wherein, the Fed is expected to hike rates aggressively. However, softening of crude oil price and surge in domestic markets may support Rupee at lower levels. Markets may also take cues from PMI data from US later today which is expected weaker than previous month. USDINR spot price is expected to trade in a range of Rs 79.20 to Rs 80.80 in next couple of sessions.

SRF Board of Directors has approved project to setup a new and dedicated facility to produce agro and pharma intermediates at Dahej at a cost of Rs. 72 Crores with an additional capacity of 915 MTPA

SRF was quoting at Rs 2,291.95, down Rs 52.65, or 2.25 percent on the BSE.

Rupee traded range bound hovering around the 80.00 mark the whole week against the dollar as the dollar index traded between a range between 106-109.

Crude price around 105$ in Brent showing volatility but again retracing back to same levels of previous week gave rupee little momentum.

All eyes on the FED statement and policy next week for further cues and direction. Rupee range till then can be seen between 79.75-80.20.