By Rahul Shah
Bulls return to the party after a long time, with an all-round performance of stocks across sectors. Domestic equity markets overcame the downbeat mood and logged gains of over 4 per cent for the week ended July 22 with Sensex closing above 56000 psychological level and Nifty above 16700 marks. There was rally attributed to strong global and domestic cues. Global market soared by 2-4% against the previous week close on account of better than expected US quarterly results and impressive economy data, despite ECB hiking interest rate by 50bps, first hike in 11-years. On the domestic front, rebound in FIIs inflow, impressive quarterly results announcement, stable oil price and hope of good monsoon boosted market sentiment. FIIs were net buyers over Rs 4000 crore last week after a long time and Brent crude was stable around $100/bbl.
Mid-cap tech, large cap cement (Ultratech), banks and metal players announced ahead of expectation. US Dollar Index fell to 106 from the recent high of above 109. Nifty Auto is also near lifetime and currently up ~8% in month of July on back of revival in rural demand, Easing in chip supply and healthy demand in domestic PV segment.
The rally may continue on Indian bourses on account of strong domestic factors and improved global outlook. Domestic bourses, on Monday, will strongly react to results announced by some of the index heavyweights. Strong performance by ICICI Bank and Kotak Bank will get the Banking universe back in focus. Also, all eyes would be on the US Fed’s meeting this week, where the central bank is again expected to increase interest rates by 75bps to tame scorching inflation.
Investors are also closely watching the quarterly earnings season for clues on how companies are weathering the impact of surging prices and gloomy consumer sentiment. The US Federal Reserve expected to slow its pace of rate hikes after a big increase at its meeting on Wednesday.
India’s monsoon improved over 10% above normal which will be big positive in the market. Strong auto sales number, FIIs buying interest, improved microdata and fall in commodity price like Brent crude and palm oil will be added fuel in the market sentiment. Also, this week is the monthly derivative expiry. It will be interesting to see the closing and could also see short covering in some select few stocks.
Nifty has formed a Bullish candle on daily scale and gave the highest daily closing of the last fifty-eight sessions. It formed a strong Bullish candle on the weekly frame and is forming higher lows from the last five weeks which indicates that the base of market is shifting higher. Now, it has to hold above 16666 zones, to extend the momentum towards 16888 and 17000 zones while on the downside support exists at 16500 and 16442 zone
Target: Rs 6650 | Stop Loss: Rs 6080
Bajaj Finance has retested the breakout on the daily scale and started the next leg of upside indicating strength. It has formed a bullish candle which indicates buying interest in the counter which will support the prices to move higher. RSI oscillator is positively placed on daily and weekly charts indicating positive move ahead. Considering the current chart structure, we advise traders to buy the stock for an up move towards 6650 with a stop loss of 6080.
Target: Rs 1600 | Stop loss: Rs 1475
Infosys has formed base around 1400 zones and inched higher. It has given falling supply trend line breakout on daily chart and managed to surpass and close above its crucial 50 DEMA. Bounce back is visible across IT space after recent fall and small follow up can take it towards higher levels. RSI oscillator is positively placed on daily and weekly charts indicating positive move ahead. Considering the current chart structure, we advise traders to buy the stock for an up move towards 1600 with a stop loss of 1475.
(Rahul Shah is a Senior Vice President, Group Advisory Leader-PCG, Broking & Distribution, Motilal Oswal Financial Services. The views expressed are the author’s own. Please consult your financial advisor before investing)