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This week, the broader indices underperformed the main indices with BSE Small-cap index adding 1.6 percent, Mid-cap and Large-cap indices rising over 2 percent each
The market bounced back and broke a two-week losing momentum in a highly volatile week ended June 24 one the back of positive global markets, softening of crude prices, positive commentary on inflation from the Reserve Bank and a progressing monsoon.
After suffering a six-day slump, the market started the week on Monday on a positive note and extended the buying the next day, while it remained under pressure around middle of the week. However, it rebounded sharply on Thursday and ended Friday session near the weekly high point.
For the week, the BSE Sensex added 1,367.56 points (2.66 percent) to close at 52,727.98, while the Nifty50 rose 405.8 points (2.65 percent) to end at 15,699.30 levels.
On the sectoral front, the BSE Auto index added 7 percent, and FMCG, Telecom, Information Technology and Healthcare indices added 3 percent each. The Metal index, however, shed 4.9 percent.
This week, the broader indices underperformed the main indices with the BSE Smallcap index adding 1.6 percent and Mid-cap and Large-cap indices rising over 2 percent each.
The market recorded some recovery in the last couple of days with a moderation in oil prices, and widespread and deepening fears of a recession. The global economic growth rate is already pitched lower by many international agencies. The interest rate action and liquidity normalisation are likely to pull down growth over a period of time, and therefore, the focus on price level may have to be moderated progressively, and this may support the economy in future," said Dr Joseph Thomas, Head of Research at Emkay Wealth Management.
"This has brought some relief to the markets. But the uncertainties around both price level and growth still continue, as the Fed has confirmed that the strong rate action will continue. The coming week would also witness some amount of volatility as the sky is still overcast with clouds of uncertainty," he said.
In the last week, foreign institutional investors (FIIs) offloaded equities worth of Rs 11,511.77 crore, while domestic institutional investors (DIIs) bought equities worth of Rs 11,670.62 crore.
FIIs sold Rs 53,600.40 crore of equities so far in June while their domestic counterparts pumped Rs 41,983.47 5 crore into the market.
More than 40 small-cap stocks added 10-28 percent last week. These include ITI, Spandana Sphoorty Financial, SEPC, State Trading Corporation of India, Chemplast Sanmar, Nazara Technologies, JTEKT India, Sterling Tools, Rolex Rings, Tribhovandas Bhimji Zaveri, Munjal Auto Industries, Jain Irrigation Systems and MMTC.
On the other hand, Brightcom Group, Dhanvarsha Finvest, Future Supply Chain Solutions, Future Lifestyle Fashions, Future Retail, KBC Global, Suryoday Small Finance Bank, Mangalore Refinery and Petrochemicals and Hester Biosciences fell 11-22 percent.
"The previous week’s brutal knock was followed by a muted start on Monday. However, markets immediately resumed their downtrend and slid towards the lows of 15,200. Fortunately, the picture improved slightly on the global front which led to a smart recovery from the lower levels on the same day. In fact, in the subsequent session, our markets had a decent relief rally to retest 15,700," said Sameet Chavan, Chief Analyst-Technical and Derivatives, at Angel One.
"Around the mid-week, we did feel some tremors, but fortunately, bulls were prepared this time to cushion the markets around key supports. In the latter half of the week, we witnessed good broad-based participation to conclude at the highest point of the week around 15,700."
He agrees with the fact that we are still not out of the woods yet and till the time Nifty does not surpass its major hurdle of 15,900–16,000 on a closing basis, he advised, one should avoid aggressive bets on the long side. It would be interesting to see how the market behaves in the first half of the week beginning tomorrow.
"If global relief extends, we may see the Nifty surpassing the 16,000 mark and this would certainly trigger a sharp short-covering rally in the market. Before this, 15,800–15,900–16,000 is to be considered a cluster of resistance. On the flip side, the immediate supports are placed at 15,500–15,350–15,200," Chavan said.
Bank of India, Info Edge India, Jubilant FoodWorks, Indraprastha Gas, Shriram Transport Finance Corporation, Endurance Technologies, TVS Motor Company, RBL Bank and Nuvoco Vistas Corporation were among the midcap gainers.
Among BSE 500 index gained 2.5 percent led by ITI, Chemplast Sanmar, MMTC, Asahi India Glass, Aptus Value Housing Finance India, Responsive Industries, Hero MotoCorp, Blue Dart Express, Jubilant Ingrevia, Sapphire Foods India and Strides Pharma Science.
"The much awaited pullback rally was seen in the markets in the week gone by. The momentum readings were too oversold and the RSI readings had shown a positive divergence on charts. The move above 15,400 with a gap led to a change in sentiment and thus, we witnessed a pullback move which was much on the cards," said Ruchit Jain, Lead Research, 5paisa.com.
"Now the Nifty has ended right around the previous support zone which was breached recently. At times, the support broken then becomes resistance on pullback but looking at the data, we believe the momentum has still more room on upside."
Many stocks that had seen short formations in this series and were trading around their respective supports saw short-coverings. The banking space has led but still some sectors such as IT, metals and mid-caps have short positions intact and if they see any short covering in the expiry week, then it could lift the markets higher. However, traders should take one step at a time and avoid aggressive trades as there are resistances seen one after another on the way up.
Where is Nifty50 headed?
Yesha Shah, Head of Equity Research, Samco Securities
The coming week has a host of events arriving which could affect the mood of the market. Globally, investors will keenly analyze the US quarterly GDP growth rate numbers. The USA would officially enter into a recession if they post a negative growth and thus this could have a spill-over effect on global markets.
In India, the vehicle sales figures will continue to fuel stock-specific moves on D-Street as investors attempt to decipher the future trend.
Moreover, the monthly F&O expiry in the second half of the week may cause volatility in the indices. Investors are thus advised to accumulate good stocks with strong fundamentals, free cash flows, and lower leverage over the long run while disregarding short-term difficulties.
Prashanth Tapse, Vice-President (Research), Mehta Equities
The market can move up for some time, but we suspect — exhaustion will occur and when that happens we will see a major correction. Technically, with an inter-week perspective, Nifty’s biggest support is seen at 15363 and below the same, expect a waterfall of selling, while a major hurdle is seen at 15807 and then all eyes will be on the 16157 mark.
We suspect Bank Nifty to outperform Nifty in next week’s trade.
Amol Athawale, Deputy Vice President - Technical Research, Kotak Securities
Technically, on weekly charts the Nifty has formed a long bullish candle which is broadly positive. On daily and intraday charts, the market is holding a higher bottom formation that also supports short-term uptrend.
For the bulls 15700-15750 would act as a key resistance level, while on the flip side 15500 and 15400 could be strong support zones for the short term traders.
Above 15750, the index could move up to 15850-15925. On the other side, a fresh round of selling is possible only after 15400 and below the same it could retest the level of 15,250-15,150.