Indian equity benchmark indices settled 1 percent lower for the week ended July 15 amid volatility, weak GDP data and rising global inflation, which fueled the fears of a further rate hike by central banks across the world. However, reduced FIIs selling, lower crude oil prices and a good monsoon provided some support to the market.
During the week, BSE Sensex lost 721.06 points (1.32 percent) to settle at 53,760.78, while the Nifty50 declined 171.4 points (1.05 percent) to end at 16,049.20 levels. However in the month of July, till now, the benchmark indices have gained over 1 percent each.
On the sectoral front, BSE Power index added 4.5 percent and BSE Oil & Gas, Auto and Realty indices rose 2 percent each. However, Information Technology index shed 6 percent.
Among broader indices - BSE Small-cap index rose 0.5 percent, Mid-cap added 1 percent, while Large-cap index shed 0.5 percent.
“After an extremely volatile week, the equity market witnessed some recovery at the weekly closing probably due to some amount of short covering ahead of the weekend. There have been some signs of improvement in the overall macro environment mainly due to the surge in the US Dollar and the consequent fall in commodity prices especially Brent,” said Joseph Thomas, Head of Research, Emkay Wealth Management.
“But currency depreciation might eat into some of the gains made in prices after the fall, as trade deficit moves close to USD 196 billion. The US inflation number surged past the 9% level and was much higher than general expectations, and this fuelled the speculation on the quantum of the next rate hike by the Fed. The market will be looking forward to the FOMC meeting as also other related developments to gauge the direction better,” he added.
In the last week, foreign institutional investors (FIIs) offloaded equities worth of Rs 5,916.01 crore. However, domestic institutional investors (DIIs) purchased equities worth of Rs 2,146 crore.
However, in the month of July, FIIs sold equities worth Rs 10,459.13 crore and DIIs bought equities worth of Rs 7,367.04, till now.
In last week, 40 smallcap stocks rose between 10-52 percent including PC Jeweller, ITI, Butterfly Gandhimathi Appliances, Mahanagar Telephone Nigam, Parag Milk Foods, GTL Infrastructure, Precision Camshafts, Anupam Rasayan India and Garware Hi-Tech Films.
On the other hand, KBC Global, DB Realty, Kriti Industries (India), Shakti Pumps (India), Tanla Platforms and Axtel Industries lost over 10 percent each.
“Sensex and Nifty saw some profit booking this week; however, broader indices ended this week with marginal gains. Sectorally, the performance was mixed, with BSE Power index posting strong gains. On the other hand, BSE IT reported sharp decline this week. Q1FY23 results of large IT companies were weaker than expected,” said Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities.
“Recent high inflation numbers and recession fear in US coupled with sharp rally in dollar index influenced global markets. India's headline CPI inflation in June was flattish month-on-month.”
Markets will continue to react to global macro factors like inflation, interest rate measures, currency and commodity movement, Chouhan said adding that with the start of April-June 2022 quarter result season, we can expect stock and sector specific action over the next one month.
Among midcaps, gainers were IDBI Bank, JSW Energy, PI Industries, Crompton Greaves Consumer Electrical, NHPC, SJVN, Oberoi Realty, Adani Power and Bharat Heavy Electricals. However, Losers included REC, Endurance Technologies, AU Small Finance Bank, Info Edge India and MphasiS.
Among BSE 500 index ended on flat note. Gainers included ITI, Anupam Rasayan India, HFCL, Star Health & Allied Insurance Company, KEC International, Aster DM Healthcare, Vakrangee and Adani Transmission. However, losers were Tanla Platforms, HCL Technologies, Birlasoft, Dr Lal PathLabs, Tata Consultancy Services, Mastek and NMDC.
“We witnessed some correction in Nifty during the week but the index has not breached its important support levels. It has retraced recent upmove from 15180 to 16270 by 38.2 percent and the rising trendline support around 15800 has also not been breached,” said Ruchit Jain, Lead Research, 5paisa.com.
On the lower time frame chart, a ‘Higher Top Higher Bottom' structure is seen which is still valid and until the index breaks the important support of 15800, the near term outlook remains bullish, according to Jain.
“The Bank Nifty index showed relative underperformance on Friday, but this index too has a similar positive structure and the 20-day moving average support for the same is placed around 34360,” Jain explained.
“The Midcap space outperformed the benchmark and ended the week with gains of a percent. This clearly indicates a buying interest in the broader markets and hence, stock specific action is likely to continue with a positive bias,” he added.
Where is Nifty50 headed?
Sameet Chavan, Chief Analyst-Technical and Derivatives, Angel One
The global environment is still not conducive, but our markets are not willing to give up as they continue to attract some buyers at lower levels. Technically speaking, 15850 – 15950 has now become a sacrosanct zone for the forthcoming week and if global markets support, we may see markets inching northwards. Hence, one should continue to remain positive till the time we do not sneak below it on a sustainable basis.
On the flip side, there are a lot of headwinds that are not willing markets to stay at higher levels. For the coming week, 16150 – 16250 are to be seen as immediate resistances and only a move beyond this would trigger some broad-based buying in the market. At this juncture, it's advisable to stay light and identify the apt themes that remain a key for momentum traders.
Amol Athawale, Deputy Vice President - Technical Research, Kotak Securities
Markets may remain volatile on worries of further rate hikes by the US Fed and unabated FPI outflows. Technically, on weekly charts the Nifty has formed an inside body Hammer kind of formation which indicates indecisiveness between the bulls and bears.
For the bulls, the 50-day SMA (Simple Moving Average) and 16000 would act as a trend decider level. A strong possibility of a fresh uptrend rally is likely, if the index trades above 16000-16050, which is a short term resistance zone.
Above the same, the index could rally till 16200-16300. On the flip side, a close below 50-day SMA or 15850 could trigger a fresh round of selling. Below which the index could slip till 15700-15650.
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