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Momentum could continue towards 11,500…


Gaurav Bora, Market Expert

Momentum is continued for sixth consecutive week. Nifty gained 3% and Sensex gained 2.7% in last week. While Midcap index gained 1% and Smallcap index gained 1.7%. A better than expected Q1 results, positive FII flows and progress in the development of a vaccine kept momentum continued last week. Positive global cues after $858 billion spending package announced by European Union also added to the rally. On Monday, the market will first react to ICICI Bank’s Q1 results announced on July 25 which are far better than streets estimate and among private sector banks. FIIs were net buyers during entire week bought equities worth 7,792 crore whereas DIIs sold equities worth 5,323 crore, given the liquidity boost the momentum might continue going forward. Some volatility can be seen in the coming week due to expiry of July F&O contracts. India has witnessed a consistent rise in COVID-19 cases with over 40,000 cases coming out each day for the last 4 days, India has so far recorded 13,36,861 cases, which includes 31,358 deaths while recovery rate stands at 63.5%. On the vaccine front progress has been very fast in some global players like Oxford University-AstraZeneca, Sinovac and Moderna Inc reaching the final stage. In India, Bharat Biotech in collaboration with the NIV and the ICMR have also begun human trials of COVAXIN drug.

Mindspace Business Parks REIT will open its Rs 4,500-crore IPO for subscription on July 27 at price band of Rs 274-275/share. Shares issued in the Yes Bank FPO will be listed on July 27; share price already corrected nearly 49% in the last two weeks. Reliance Industries will announce Q1 earnings on July 30, street will keep an close eye on Reliance as stock rallied more than 50% in last 2 months. On the global front two-day meeting of the FOMC will be concluded Wednesday, interest rate is expected to remain steady but the commentary will be closely watched by the world.

Key factors for the week:

• Covid 19 pandemic remains a key factor to watch out for in the coming weeks.

• Jul F&O expiry on July 30.

• Reliance will announce Q1 results on July 30; street expects ARPU at around Rs 135-137 per month with strong EBITDA while on the refining front GRM at $9.0 per barrel.

• More than 560 companies will release their quarterly earnings which also included some Q4 earnings as well but the extended deadline to announce Q4 earnings will end on July 31, while June quarter earnings season will continue. This includes frontline stocks like Reliance Industries, State Bank of India, Bharti Airtel, Kotak Mahindra Bank, HDFC, Maruti Suzuki India, Tech Mahindra, Dr Reddy’s Laboratories, Nestle India and IOC will be key earnings to watch out for.

Technical View:

Short to medium term trend remains positive but in the near term there could be some consolidation given the consistent run-up in equities and due to July F&O expiry. If Nifty sustains 11,200 levels then we may see rally towards 11,300 and 11,500. The maximum Put open interest shifted to 11,000 strike and is also likely to act as a major support in the coming week. Maximum call open interest at 11,500 followed by 11,200 and maximum put open interest at 11,000 followed by 10,800. Nifty could trade in the range between 11,000-11,500. Move above 11,200 could pull Nifty towards 11,500. India VIX reached to 24.54 levels during the last week, which can give comfort for long creation.

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