Market recovered on last trading session of the week after six consecutive losing trading sessions; Nifty (-1.2%), Sensex (-1.2%). Mid Cap & Small Cap index lost -1.60% and -2.50% respectively in this week. The underperformance was more on the broader front from Midcap index and Smallcap index for the week, taking a total three-week loss to 8 percent each. Banking stocks also came down in this week and Bank Nifty lost -1.50%. FIIs sold equities worth 7000 crore and DIIs were net buyers in last week, FIIs sold nearly 15000 crore in July after Union Budget. However DIIs supported the market as they bought similar amount so far in july month. Pull back seen on last Friday can be extended further, but corporate earnings and consistent FII selling will be matter of worry for market. Stock selection will be the key in coming week and focus should be earning season. ICICI Bank announced strong earnings which were quite strong with 27 percent growth in NII and 15 percent in loan book and asset quality improved as NPA declined, market will react positively on ICICI Banks quarterly results we have buy rating on ICICI Bank (Stock have potential to become multiple times from here).
FOMC policy meet, monsoon progress and corporate earnings are key factors to watch out in coming week. In the coming week around 400 companies will announce their Q4 earnings including frontline companies like HDFC, SBI, Axis Bank, Tech Mahindra, Hero MotoCorp, ITC, Dr Reddy’s Laboratories, Eicher Motors, IOC, UPL and Bharti Airtel. Brent crude closed one n half percent up to $63.83/bbl during the week. Rupee slipped 14 paisa on friday and USDINR closed to INR68.90. Important event market to watch out for would be the Federal Open Market Committee’s two-day policy meeting that concludes on July 31, market expect Federal Reserve to cut interest rate by at least 25 bps to help the economy grow in the face of trade wars and growth slowdown. Market will closely watch FOMC meet outcome ahead of RBI policy which is scheduled on August 7. This correction is opportunity for long term investors who have an investment horizon of 2-3 years.
Monday market may open on flat note as SGX Nifty at 11314 (-14). Nifty remained at crucial support level of 11,300 on closing basis but Nifty tried to close below this levels 3 times in last week but failed to close below this levels which is a sign that we have already made the bottom. After losing around 8 percent in a month, the market looks oversold hence the pull back rally could be extended in the coming session, but confirmation of same is possible only if the index closes decisively above 11,350 level because overall sentiment still remains in favor of bears. India VIX moved down to 12.16 from 12.51 levels in the last week. On the options front, maximum Call open interest (OI) is at 11,400 followed by 11,300 strike while maximum Put OI is at 11,200 followed by 11,300 strike. Current option data shows a broad trading range between 11,200 to 11,500 levels on the Nifty. On lower side if Nifty crucial support at 11,200 levels, on the higher side immediate hurdle is at 11,350. Nifty has to sustain above strong hurdle of 11,350 for upside and we may see 11,500.
Data shows we may see upside above 11,350 in coming week. So traders are advised to take fresh buy position above 11,350 then we may see nifty rally till 11,500.
FOR INVESTORS THIS IS BUYING OPPORTUNITY ACCOUMLATE QUALITY STOCKS ON EVERY DIP, AS THIS VOLATILITY IS BECAUSE OF MAJOR EVENT BUT FUNDAMENTALS ARE VERY MUCH INTACT.VOLATILITY IS FRIEND OF INVESTOR.
Top Gainers of the Week:
Yes Bank (+15.38%)
Zee Entertainment (+14.44%)
Asian Paint (+11.49%)
Sun Pharma (+4.41%)
Bharti Infratel (+4.12%)
Top Losers of the Week:
Adani Ports (-5.88%)
Coal India (-5.07%)
Tata Motors (-4.97%)