Sensex ended at 64,718.56, higher by 803.14 points or 1.26% last week on Friday. While Nifty 50 surged by 216.95 points or 1.14% to end at 19,189.05.
In the week from June 26th to 30th, Sensex rallied by 1,658.59 points or 2.63% and Nifty 50 zoomed by 511.60 points or 2.74%.
Talking about the weekly performance, Vinod Nair, Head of Research at Geojit Financial services said, “The week commenced with a relatively flat trend in the domestic market, as the global equities exhibited a negative bias due to concerns over economic growth stemming from political instability in Russia. However, positive economic surprises in the global market and the progress of the southwest monsoon provided a much-needed boost, enabling the domestic market to achieve new highs with renewed vigor.”
Nair also added, “The market’s upward momentum was further supported by strong inflows from FIIs, the merger update of HDFC, and a narrowing current account deficit.”
In the week that went by, both Sensex and Nifty 50 hit a new lifetime high of 64,768.58 and 19,201.70 respectively.
On the global front, Nair said, “Investors confidence was uplifted by favourable revisions in US Q1 GDP, a decline in jobless claims, and positive outcomes from the US bank stress test conducted by the Fed. IT, Pharma, and Auto sectors emerged as top performers throughout the week, making significant contributions towards overall market performance. Additionally, mid-and small-cap stocks recovered from their losses of the previous week, indicating a regained investor interest in these segments.”
On July 5, the US Federal Reserve will release the minutes from the latest FOMC meeting.
Furthermore, it needs to be noted that June becomes the best month with strong FPI inflows in 2023. The FPIs pumped in ₹47,148 crore in Indian equities in June, making it the highest monthly buying of the year.
During this month, Sensex has skyrocketed by a whopping 2,171.45 points or 3.47%. While Nifty 50 has zoomed by 654.95 points or 3.53%.
For the coming week, Ajit Mishra, SVP – Technical Research, Religare Broking said, “Apart from favorable domestic cues, stability in the US markets has been playing an important role in maintaining buoyancy. A decisive close above 34,600 in Dow Jones Industrial Average (DJIA) would add more legs to recovery and that could help our markets to witness steady a uptrend.”
Also, Mishra added, “We recommend maintaining the “buy on dips” approach as we are eyeing the 19,350-19,500 zone in Nifty. In case of any dip, the 18,700-18,900 zone would provide the needed cushion. With the surge in banking and recovery in IT, all the key sectors are now in sync. Participants should align their positions accordingly and avoid contrarian trades.”
Further, as per Mitul Shah – Head of Research at Reliance Securities, the delay in monsoon rains and the possible onset of El Nino is triggering caution among policymakers. However, economic activity has held up well so far in Q1FY24 and there is increased optimism on the domestic economy. Meanwhile, CAD narrowed to $1.3bn or 0.2% in 4QFY23 from $16.8bn or 2% of GDP in Q3FY23 and $13.4bn in Q4FY22.
In the US, Shah added, “Federal Reserve and other central bank chiefs have suggested that interest rates may need to rise further to curb inflation. Bank stocks, in particular, have performed well as large US banks passed the Fed’s annual stress test, proving they have enough capital to withstand a sharp economic downturn.”
Further, in the case of Nifty, Ashwin Ramani, Derivatives & Technical Analyst, SAMCO Securities said, “The Relative Strength Index (RSI), a momentum indicator, broke its lower high formation on the daily chart, which is a positive sign for the Index.”
Ramani highlighted that Nifty has given a higher close on the daily chart in the last three consecutive trading sessions. Nifty can face a hurdle of around 19,200 on the back of more call writing compared to put writing. However, options activity at 19,200 Strike will provide cues about the Nifty Intra-day direction on Monday.
In regards to Bank Nifty, Ramani said, “the Implied volatility (IV) of Bank Nifty (12.94) is still at the lowest end of its historical range as indicated by Implied Volatility percentile (IVP), which stands at 9%. This means that only on 9% of the days in the last one year, Bank Nifty’s IV was trading below 12.91. This also means that the Bank Nifty’s IV traded above 12.91 for 91% of the days in the last one year. Debit Spread option strategies are usually preferred by traders to take advantage of a low IV environment.
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Updated: 02 Jul 2023, 06:46 AM IST