The trend in Indian markets mirrored a similar move in key Asian and European markets, largely driven by a decline in global crude oil prices on hopes of easing geopolitical tensions.
Dealing room checks show strong buying by foreign institutions in the absence of domestic funds due to a public holiday on Monday. Foreign portfolio investors (FPIs) purchased a net $80-million shares in the cash segment, showed provisional data from stock exchanges. Foreign funds have pumped in close to $650 million this month and roughly $12.3 billion in Indian equities so far this calendar year, Bloomberg data showed.
Experts said the markets will see further consolidation before moving higher, highlighting various technical and fundamental indicators, including the geopolitical issues in Ukraine and Iraq. After the rally of last couple of months, we are entering a phase of consolidation. So, it is more likely that the gains from here onwards will be little back-ended rather than completely front-loaded like it was in last six months, said Nilesh Shah, MD & CEO, Axis Capital.
Shah said markets will positively look at the Prime Minister's speech on the Independence Day. Clearly, from a market man point of view, 'Made in India' is something that is very comfortable to the market... in Indias case, the execution is more critical than just the intent. So, the steps that the government takes on ground are what the market will be looking forward to, Shah added.
PM Narendra Modi sent a message to global companies on his maiden Independence Day address with his 'Come, Make in India' tag-line. Modi reiterated the BJPs manifesto, saying, If we have to provide more and more employment to the youth, we will have to promote the manufacturing sector. I want to appeal to all the people world over... come, make in India, come, manufacture in India. Sell in any country of the world, but manufacture here.
The I-Day speech has to be for the masses, but it did have something for the markets, said HDFC Securities in a morning note. He (Modi) announced bank accounts for every individual, along with life insurance of Rs 1 lakh to the poor. He issued a clarion call to the world businessmen to come and make business in India. His I-Day speech has raised the expectations of an effective industrial policy that could make India a manufacturing hub. But its a long distance away, the note said.
Experts have charted a range of 7,950 as immediate resistance and 7,500 near-term support for Nifty. The corresponding levels for Sensex stand at 26,700 and 25,500, respectively, experts said. Analysts reading indicators also highlighted Nifty's put-call ratio for August expiry, which stands at 1.42 at four-month high.
A reading above one implies more puts are traded than calls, and indicating the majority of traders are bearish. However, put-call ratio is a contrarian indicator, and many traders consider a large ratio as a sign of a buying opportunity because they believe that the market holds an unjustly bearish outlook. Market breadth was strong with 25 out of Sensex-30 companies ended in the green on Monday.
Ten out of 12 sectoral indices ended positive. BSE Oil & Gas index was the top gainer. Indian oil refiners rose as cooling-off in crude prices will help reduce the burden of under-recoveries on the state-owned oil companies and the government. Brent crude futures on the Intercontinental Exchange (ICE) for October delivery dropped 2.2% to below $102 a barrel after Ukraine and Russia met for talks, and Kurdish forces made progress against militants in Iraqs north.
BPCL jumped nearly 6% to a new record with trading volumes rising to 28.66 crore shares, almost twice the average volume in the previous 30 sessions. HPCL rose 6.5% whereas Indian Oil Corp gained 4.3% from the previous close. Rikesh Parikh, VP, market strategy, Motilal Oswal Financial Services, said under-recoveries of oil marketing companies will be gone soon, as oil price deregulation will lower interest costs for oil marketers and boost cash flows.