Closing Bell: Nifty above 19,300, Sensex up 487 pts led by metal, oil & gas; IT, pharma drag

Taking Stock: Bulls tighten grip; Market at fresh high led by metal, oil & gas, financials

Nifty Bank index also touched a new high of 45,353.20, ending with 0.92 percent gains at 45,158.10.... Read More

The Nifty witnessed a gap up opening for the fourth consecutive day and continued to inch higher throughout the day to close with gains of ~130 points. On the daily charts we can observe that the Nifty has witnessed a perpendicular rally in the last five trading sessions. it has rallied around 675 points without a meaningful pullback. The hourly momentum indicator has triggered a negative crossover which indicates loss of momentum however we shall await evidence on the price front to forecast a consolidation. A break of today’s low (19234) shall be the first signs to look for a consolidation to set in and until then the strategy to trade would be hold on to the long positions with a trailing stoploss mechanism. Overall, the uptrend is intact, and we expect levels of 19500. In terms of levels, 19230– 19200 shall act as a crucial support zone while 19380 – 19400 shall act as a crucial resistance zone.

As far as Bank Nifty is concerned, the Index has witnessed follow through buying interest and is hitting New All-time highs along with the Nifty which is a bullish sign. The daily Bollinger bands are expanding and the prices are moving along the upper band indicating that the positive momentum is likely to continue. The daily momentum indicator has triggered a fresh positive crossover which is a buy signal. Thus, both price and momentum indicator is suggesting a further upside in the Bank Nifty. On the upside we expect it to target levels of 45500.

Markets edged higher in continuation to the prevailing trend and gained over half a percent. Upbeat global cues triggered a firm start and rotational buying across heavyweights kept the tone positive till the end. Consequently, the Nifty index settled closer to the day’s high at 19,322.55 levels; up by 0.70%. Most of the sectoral indices traded in line with the benchmark wherein energy, FMCG and metal were among the top gainers. Meanwhile, the broader indices traded mixed wherein midcap ended flat but smallcap gained over a percent.

We may see a breather in Nifty after the recent surge and it would be healthy. The existence of a hurdle at the 19,350 level combined with overbought reading may prompt traders to book some profit. However, any intermediate dip should be considered as a buying opportunity, so traders should keep their list of preferred stocks ready.

Nifty opened on a strong note and had a fourth consecutive gap up start to the trading session. However, it showed no signs of fatigue and sailed beyond 19300 levels comfortably. Though the initial push was supported by a buoyant Nifty Bank, the second half of the trading session witnessed heavyweights like Reliance and ITC taking the lead to keep the index near intraday high levels when Nifty Bank witnessed a minor profit booking.

The index has given a breakout from ascending wedge pattern and has managed to comfortably close above the breakout area implying it can continue to move towards 19500 levels till it sustains above 19150 levels on the immediate basis.

HDFC Bank and ICICI Bank have performed significantly well since 2-3 years. Nevertheless, ICICI Bank has outperformed the sector with improvement in credit quality and growth across verticals.

The valuation gap between these two banks have narrowed down. Post the merger of HDFC and HDFC Bank, we believe, the valuation re-rerating will be delayed factoring margin squeeze. The impact on the return profile will be keenly watched in the coming period. Hence, in the short run, we don’t see the valuation gap widen between HDFC Bank and ICICI Bank.

Domestic equities surged higher, continuing last week's positive sentiment amid healthy 12% growth in GST collection at Rs.1.61 lakh crore for the month of June. Nifty continued its upward momentum driven by buying seen in index heavyweights. The index finally ended the session with gains of 133 points (+0.7%) at 19323 levels.

Sectorial it was a mixed bag with a rally seen in PSU bank – up 3% and Oil & Gas up 2%. Metals stocks were in the limelight on the back of marginally better-than-expected China manufacturing PMI data.

Markets would react to other macro data like Manufacturing PMI data from the US, India’s Manufacturing & Service PMI data, and FOMC meeting minutes, which would be releasing this week.

US markets will remain closed on 4th July (tomorrow) on account of Independence Day. The overall structure of the market remains positive with Nifty attaining new highs at a steady pace.

We expect PSU Banks to remain in focus on the expectation of healthy Q1FY24 numbers. With the monsoon deficiency reducing to 10%, agri-related stocks are like to be in focus.

The market's record breaking momentum continued as the robust June GST collections, and the monsoon covering most parts of the country in last few days brought cheers to investors.

The rally has been mostly due to strong foreign fund inflows and India performing well on most of the economic parameters could further strengthen the fund flows in the near term.

Technically, the Nifty hovered between 19250 to 19335 price range, with the short term technical set up still in to the positive side. However, due to temporary overbought conditions we could see some profit booking at higher levels. For traders, 19250-19180 would be the key levels to watch out while 19400-19435 could act as a crucial resistance zone.

Sentiments of investors are reinforced by positive domestic data and optimistic global cues. Global market was supported by resilient economic data, avoiding the possibility of a recession. India’s stock market trend was broad-based, owing to the outperformance from energy, financial, metal, and FMCG sectors. Economic activities are gaining strength with PMI level enlarging to 57.8, indicating sustained demand for products, fostering a sense of confidence in the manufacturing prospects.

Indian rupee closed higher by 9 paise at 81.95 per dollar versus Friday's close of 82.04.

Market Close: Benchmark indices ended on strong note on July 3 with Nifty above 19,300 and Sensex up 480 points.

At close, the Sensex was up 486.49 points or 0.75% at 65,205.05, and the Nifty was up 133.50 points or 0.70% at 19,322.50. About 1910 shares advanced, 1688 shares declined, and 138 shares unchanged.

The biggest Nifty gainers were Grasim Industries, ITC, BPCL, Reliance Industries and Bajaj Finance. The losers included Bajaj Auto, Power Grid Corp, Sun Pharma, Cipla and Dr Reddy's Laboratories.

Among sectors metal, oil & gas, FMCG and PSU Bank up 1-3 percent, while Information Technology and Pharma indices down 0.5-1 percent.

The BSE midcap index up 0.3 percent and smallcap index rose 0.5 percent.

-Underweight rating, target at Rs 1,125 per share
-Average daily traded value (ADTV) is key driver of profit & share price
-In June 2023, ADTV was up 12% MoM to Rs 58,500 crore led by options
-MCX was up 3% after a fall of 9% following contract extension with 63 Moons

In June 2023, the overall disbursement at ~ Rs 4,250 crores delivering a 12% Y-o-Y growth and Q1FY2024 disbursements stood at ~ Rs 12,150 crores registered a growth of 28% Y-o-Y.

Healthy disbursement trends during Q1FY2024 have led to Business Assets at ~ Rs 86,600 crores, growth of ~ 4.6% over March 2023 and ~ 28% over June 2022.

The Collection Efficiency (CE) was at 96% for June 2023 (In June 2022, CE was 96%). The current quarter’s CE was at 94% similar to level seen in Q1FY2023.

Indian Rupee appreciated on positive domestic markets and FII inflows. Domestic equity indices are trading at all-time highs. However, the strong US Dollar and surge in crude oil prices capped sharp gains.

India’s manufacturing PMI fell to 57.8 in June from 58.7 in May and trailed the forecast of 58. US Dollar gained on the decline in Euro which fell on weak PMI data. Dollar also edged higher on rising expectations of a rate hike in July. The greenback fell on Friday on softer-than-expected inflation.

We expect Rupee to trade with a slight negative bias as a strong Dollar and rising crude oil prices may put downside pressure on Rupee. However, a positive tone in domestic markets and steady FII inflows may support Rupee at lower levels. Traders may remain cautious ahead of ISM manufacturing PMI data from the US today and non-farm payroll data later this week. Traders may also take cues from India’s services and composite PMI data this week. We expect the USDINR spot to trade between 81.60 to 82.40 in the near term.