After 17-wk rally, Nifty in correction mode
Benchmark index on upward trajectory from low of 16,828pts
image for illustrative purpose
New Delhi Nifty fell 0.5 per cent over the week after gaining for the previous four weeks. 19,562 becomes a crucial support for the Nifty below which a fall of another two per cent could follow and the 17-week rally from the low of 16,828 could be said to have ended, says Deepak Jasani, head (retail research), HDFC Securities.
In last three sessions in a row, Nifty tanked 372 points or 2.42 per cent as it on Thursday (Aug 3) declined below the 19,300 mark in intraday trade before paring some of the losses to close at 19,381.65 points, still down by 144.90 points or 0.74 per cent.
Vinod Nair, head (research) at Geojit Financial Services, said “the domestic market passed through a volatile week, with the benchmark index underperforming its broader peers. The recent correction of the domestic market can be attributed to several headwinds, including mixed Q1 results, a reversal in FII activity, a rising dollar index & US bond yields, and an increase in crude oil prices.”
In the coming days, domestic earnings will remain a crucial driver, while global cues will also play a vital role in shaping market trends, he said.
Nagaraj Shetti, Technical Research Analyst, HDFC Securities said, “the Nifty seems to have formed a new lower high on Thursday (July 27), which reflects ongoing downward correction in the market. This is also suggesting a possibility of selling pressure emerging on any upside bounce from here.”
Corporate earnings season started on a weak note, Nifty-50 (ex-financial & commodity) operating earnings grew by 11% YoY, 3 per cent behind expectations, Antique Stock Broking said in a research.
The miss in terms of operating earnings was largely driven by IT services, cement, and FMCG. Overall, the domestic demand momentum continues in banks, cement, and real estate; while FMCG was a laggard.
“Broadly, we continue to believe that the market appears to be capped in the near term given elevated valuation amidst slower growth in advanced economies in the near term,” the report said.
Indian equities remain near life-time high levels, supported by strong FPI equity flows, highest CYTD among select EMs and the highest for the fifth month in a row, the report said.
