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Consolidation could continue in coming week…

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By Gaurav Bora, Market Expert

Momentum is continued for four consecutive weeks. Nifty gained 1.5% and Sensex gained 1.6% in last week. While Midcap index gained 0.8% and Smallcap index gained 1.6%. Sentiment of market remained strong due to easing geo political tensions between India-China and easing of lockdown in major part of country. The progress in vaccine and encouraging speech by the PM Narendra Modi at the India global week summit improved mood of street. Gradual recovery in Covid 19 cases and favourable global market cues can keep market going up, on the other side as worst already priced in. FIIs turned net sellers Rs 635 crore and DIIs sold equities worth Rs 2609 crore last week, however FIIs net selling for July so far is Rs 2,031 crore worth of equities. India has reported over 8 lakh confirmed cases of COVID-19, consistent rise in COVID-19 cases with over 25,000 cases coming out each day for the last 4 days. Positive development is that India’s recovery rate stands at 62.78%.

Reliance Industrie’s 43rd Annual General Meeting which will be held on July 15, market will closely keep an eye on the speech by Chairman Mukesh Ambani. Reliance successfully achieved it’s debt reduction plan well before its deadline of March 31, 2021 through stake sale in Jio Platforms and rights issue. After TCS’s numbers last week now the street will closely watch Infosys’s Q1 earnings on July 15 and HCL Tech’s Q1 result on July 17. On the macro data front CPI and WPI inflation for June will be released on July 13 and July 14 respectively.   

Key factors for the week:

  • Covid 19 pandemic remains a key factor to watch out for in the coming weeks.
  • Reliance Industries 43rd Annual General Meeting which will be held on July 15, market will closely keep an eye. Reliance holds huge weight in index; markets too are expected to remain on a higher side on the expectation of positive announcements in AGM.
  • Specialty chemicals manufacturer Rossari Biotech will open its nearly Rs 500 crore, IPO will open on July 13 to July 15 and price band will be 423-425/share.
  • As we are entering into Q1 earnings season, more than 60 companies will announce their quarterly results. These include frontline stocks like Infosys, Wipro, HDFC Bank, Britannia Industries, HCL Technologies and Mindtree, etc.

Technical View:

Nifty continued to move in a narrow range for fifth consecutive trading session on Friday. The consistent range bound move after hitting four-month high indicates that the market could consolidate. Major upside and downside from here on is likely if the index breaks its range of 10,600-10,850 decisively on either side. Maximum call open interest at 11,000 followed by 10,800 and maximum put open interest at 10,700 followed by 10,600. Nifty could trade in the range between 10,600-11,000. India VIX reached to 24.94 levels during the last week, which gives comfort for creating longs.

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