Gaurav Bora – Market Expert
Benchmark indices continued momentum in last week, rally continued for 2 consecutive week. Nifty gained 5.7% and Sensex gained 5.5% in last week. Midcap and Smallcap index also participated in pull back gained 6% and 7.8% respectively. After upside rally of around 12% in benchmarks as well as the broader markets for two consecutive weeks backed by FIIs buying, some profit booking can be seen but the sentiments may remain positive. All together taking the total recovery from March’s lows to over 33%. FIIs bought equities worth 13,927.52 crore in the first week of June, which was higher than the total buying done in entire May worth 13,914.49 crore. Market will stay cautious as rising number of confirmed COVID-19 cases and geo-political tensions.
Reliance’s biggest right issue of 53125 crore closed in last week with healthy subscription figures. Silver Lake comes back with more investments will pump another 4,546 crore in Reliance Jio platform, this is second deal immediately with 24 hours after announcement of Mubadala Investment Co’s 9,093 crore investment in Jio. Market will keep an eye on 40th GST council meeting which will be held on June 12, they will discuss the impact of Covid 19 on revenue collection and measures to increase revenue collection.
Key factors for the week :
• Economic activities will resume from June 8 but rapidly rising number of COVID-19 cases remains a major concern for markets. India has reported over 2.3 Lac confirmed cases and close to the 10,000-mark in terms of cases being reported on a daily basis. However, India’s recovery rate is now around 48% which is sign of relief.
• FIIs buying were one of key reasons for rally in the market in last two straight weeks and the same will be keenly watched going ahead after liquidity measures announced by global central banks. Further FIIs mood will decide long term direction of Indian markets.
• Globally, all eyes will be on Federal Reserve’s commentary in its two-day policy meeting which will be on June 10. We may expect Fed to announce additional bond-buying programs to support the economy.
• Around 110 companies are expected to declare their Q4 earnings in this week. Important earnings to watch out for in coming week would be Titan Company, Hero Motocorp, Eicher Motors, Hindalco Industries, Mahindra & Mahindra, PVR, Shriram Transport Finance, etc.
Technical View :
Nifty could take some breath at 10,200 in coming time, if Nifty sustains above 10,200 we can head towards 10,500. The short term trend of Nifty continues to be positive. Any correction towards 9,800 could be a buy on dips opportunity for the next week. We can expect some moderate up move in the coming week as well but traders should avoid aggressive long positions on higher levels and focus on stock specific movement. Maximum call open interest at 10,500 followed by 10,300 and maximum put open interest at 9800 followed by 10,000. On downside Nifty has to hold 9800 mark, 9800 will act as strong support for market. India VIX fell 5.6% to end near 28.5 levels, cool-off in volatility which is supportive for bulls and suggests further pullback.