By Gaurav Bora, Market Expert
After consolidation buying in equity markets resumed in last week. Nifty gained 4.4% and Sensex gained 4.5% in last week. Midcap index and Smallcap index gained 2.8% and 3.8% respectively. Last week market rallied as market could be focusing on economic growth after nationwide lockdown; rally was majorly led by banking and NBFCs. Reliance Industries which lifted sentiment after becoming debt free through right issue and stake sale in Jio platforms, Reliance was major contributor in marker recovery. FIIs turned net sellers Rs 3,322 crore last week, however they have turned into bullish side and bought 1603 crore in last 2 trading sessions. COVID-19 cases have seen a significant rise in June as the Centre and state governments eased lockdown measures to support economy. India reported over 10,000 new cases of COVID-19 on each day last week. This remains a matter of concern for the market to some extent and this can limit market upside. India has reported nearly four lakh COVID-19 cases which is 4th largest figures in the world, India is only behind the United States, Brazil and Russia.
The hope of economic recovery has also been one of the major factors can boost market sentiments in coming week. Oil prices gained for last seven out of eight consecutive weeks reached around $38-42 levels on optimism over re-opening of economies globally, this oil price favourable for India as imports 85% of requirement and hence that has also been supporting Indian market. On the macro current account data for Q4FY20 will be released on June 26.
Key factors for the week :
• Covid 19 pandemic remains a key factor to watch out for in the coming weeks.
• Traders will monitor the escalating tensions between India & China along the LAC. Any increase in tensions and FIIs selling can have an immediate impact on the markets. Considering the volatility this seems to be a sell-on-rise market and traders should keep booking their profits. Traders will continue to monitor the situation along the India-China border in Galwan Valley, though both sides have agreed that the situation would be handled in a responsible manner.
• The Centre and state governments having eased lockdown measures in June, have indicated that they want to reopen the economy further in almost whole country. Market will be closely watching for details of the next phase of “unlock’, which will give direction to the market.
• Expecting volatility due to expiry of June derivative contracts.
• We are moving towards the end of the March quarterly earnings season. More than 600 companies will announce their quarterly earnings this week, which include majority of midcap and smallcaps with few largecaps. Some frontline stocks which includes ITC, Asian Paints, GAIL India, Coal India, IOC, Bank of Baroda, Info Edge, United Breweries, Ashok Leyland, Glenmark Pharma, IRCTC, Sun TV Network, etc.
Nifty has not only closed above crucial resistance of 10,200 but also has managed to trade above 100 DMA. Nifty is on the way towards new higher top above 10,330 levels and sustainable move above this levels could pull towards 10,550-10,600 levels by next week. On the downside, key support would remain at 10,000. Maximum call open interest at 10,500 followed by 11,000 and maximum put open interest at 10,000 followed by 9900. Decisive Break above 10,500 could show lightning rally towards 11,000, which can be possible with positive global sentiments. India VIX reached to 29.96 levels during the last week, which will boost bulls confidence in coming week.