A volatile week for Indian markets but benchmark indices managed to hold on to crucial support levels which suggest that bulls remain firmly in control despite some profit-taking at higher levels.
Both S&P BSE Sensex, and Nifty50 rose 1.1 percent for the week ended June 25, compared to a 1.4 percent gain seen in the small & midcap indices.
The broader markets outperformed benchmark indices which suggest that the rally is broad-based. Stocks that continue to outperform are from the infra, banking, consumption, chemicals, and logistics space.
As many as 21 stocks in BSE500 rose 10-20% last week. These include include names like Godrej Agrovet, IFCI, GMR Infrastructure, The South Indian Bank, Allcargo Logistics, Bharat Electronics, and Venky’s.
“BSE Sensex and Nifty50 increased by 1.1% each during this week. The market rally was broad-based with BSE Midcap and BSE Smallcap index also moving up from correction witnessed in the latter part of last week,” Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities said.
“With declining new cases and pick-up in vaccination pace, the markets would now hope for a gradual lifting of lockdown and rebound in economic activity,” he said.
Foreign institutional investors (FIIs) remained net sellers in four out of the last five trading sessions. They pulled out more than Rs 2600 crore from the cash segment of the Indian equity markets.
Sectorally, buying was seen in capital goods (up 4.06%), metals (up 3.5%), and IT (up 3.1%), while selling pressure was seen in oil (down 2.1%), utilities (down 0.7%), and FMCG (down 0.2%) in the week gone by.
Where is the index headed?
Nifty50 has rallied 13 percent so far in 2021 and about 3 percent in the June series. The nation’s fear gauge - India NSE VIX stands at levels last seen in February before the pandemic struck.
The US Fed’s hawkish tilt last week caused only a blip, but a sharp ramp-up in India’s vaccinations drive with record doses being administered June 21 onwards added to the positive sentiment.
“As we head into July expiry substantial gains for heavyweights may be harder to come by, given that recent good news is already priced in. Also, the 12-month forward PE ratio for the Nifty is now nearly 2sd above the 10 years mean and is also one of the highest in major Asian equity markets,” Edelweiss Securities said in a note.
“The journey onward would require Q1FY22 earnings to be stellar as states gradually lift curbs. While ample liquidity should limit any alarming downside, the decline in volatility suggests a measure of complacency has set in,” it said.
In July month, as per our derivative, quantitative and technical screeners, Edelweiss believes that the market could trade in a broad range of 15,350(support zone) to 16,050 (resistance zone) with sectoral level rotation.
Technically, the Nifty has formed a bullish Marabozu candle on the weekly charts, which suggests strength for the upside in the upcoming days.
“Nifty has formed a Marabozu candle on the weekly charts, and from the oscillator front, Stochastic has also suggested positive crossover, which indicates bullish strength for the near term,” Sumeet Bagadia, Executive Director at Choice Broking.
“Nifty50 continued to trade with the support of 21-Days SMA i.e. 15,708 which added strength in the counter. At present, the Nifty seems to have resistance at around 15900 levels. Crossing above the same can show 16200 levels while immediate support comes at 15600 levels,” he said.
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