Markets will take cues from major domestic and global economic data such as India’s CPI, IIP, statements from US Fed Chief, US core CPI inflation and initial jobless claims, the first quarter earnings, development of monsoon, international crude oil prices

Ahead of the Union Budget, markets remained optimistic about stronggovernment support for the economy, especially for the manufacturing sector, in the upcoming Union Budget, expectations over the Q1/FY25 earnings season, good spread of Monsoon, FII lows and global cues.

Equity indices extended the winning streak for the fifth consecutive week; with benchmark indices crossing major milestones in the first week of July. On July 5, BSE Sensex and NSE Nifty touched record highs of 80,392.64 points and 24,401 points, respectively. The Sensex rose 963.87 points or 1.21 per cent toclose at 79,996.60, while the Nifty index gained 313.2 points or 1.30 per centto close at 24,323.80. BSE Mid-cap Index and the Small-cap index gainednearly 3 percent and 4 per cent respectively showcasing outperformance ofbroader markets. Outperforming sectors during the week ended were theInformation Technology, Pharma, Media and Oil & Gas sectors.

FIIsextended their buying with purchases worth Rs6,874.66 crore. Incomparison, DIIs remained net sellers as they sold equities worth Rs385.29crore. It is pertinent to observe that the FIIs turned net buyers in Indianmarkets after two months of selling. In June, FIIs injected a net investmentof Rs26,565 crore into Indian equities. The performance of domestic andforeign investors will have an impact on the way movement happens in thedomestic stock markets. The Indian rupee fell against the US dollar as itended 11paise lower at Rs83.49 on July 5 against its June 28 closing at Rs83.38. The rupee is expected to continue trading sideways between 83.35and 83.70.

In the near term, equity markets will take cues from majordomestic and global economic data such as India’s CPI, IIP, statementsfrom US Fed Chief, US core CPI inflation and initial jobless claims, the firstquarter earnings from IT majors TCS and HCL Technologies, developmentof monsoon season, international crude oil prices, and other global cues. Oilprices remain critical for markets with their impact on inflation and on therate trajectory of global central banks including India’s. On the back of Q1FY25 earnings season, expect stock and sector-specific action in the weekahead.

IPO Corner:

India’s robust economic foundation and bright growth prospectsmade it an excellent time for the country’s thriving IPO market. Observersanticipate substantial investment in public markets and also high demand forboth new-age and conventional businesses in the near future. During thefirst half, around 35 companies from diverse sectors such as co-workingspace, furniture retailing and online ticket booking have been able to tap themarket raising almost Rs32,000 crore. A stronger H2 CY25 for the IPOmarket is anticipated, with increased activity, potentially larger deals, andnew listings across diverse sectors. As always, thorough analysis ofindividual company fundamentals and future prospects remains crucialbefore making any investment decisions. Coming week will see listings ofEmcure Pharmaceuticals and Bansal Wire, both of which have generatedhealthy traction among investors.

Too many investors become obsessed with being right, even when thegains are small. Winning big and cutting your losses when you’re wrong aremore important than being right.

FUTURES & OPTIONS / SECTOR WATCH

Continuous sector rotation has played a crucial role in sustaining and drivingthe market higher. Sectors such as IT, Pharma, Railways, Defense, PrivateBanks, and Oil & Gas have all contributed to this upward momentum. TheNifty reached a record high and closed with a weekly gain of over 1 per cent, whilethe Bank Nifty rose by more than 0.5 per cent. In the option segment, highestconcentration of call open interest is at the 24400 strike, followed by the24,500 strike. Significant open interest on the put side is observed at the24,300 strike, followed by the 24,200 strike. The highest put open interestwas observed at the 24,000 and 24,200 strikes. For the Bank Nifty, thehighest call open interest was observed at the 53,000 and 54,000 strikes,while on the put side, the highest open interest was at the 52,500 and52,000 strikes. While Implied volatility (IV) for Nifty’s call options settled at12.69 per cent, while put options concluded at 13.07 per cent. The India VIX, a keymarket volatility indicator, closed the week at 13.35 per cent. The Put-Call RatioOpen Interest (PCR OI) stood at 1.25 for the week. As long as the index istrading above the psychological level of 24000, it is likely to continue itsupward journey and test the level of 24600, followed by 24850 in the shortterm. While, on the downside, if the index slips below the level of 24000,then the next support is placed in the zone of 23800-23750 level. It isexpected that Bullish momentum is likely to carry in upcoming sessions aswell and traders should use dips to create fresh longs as far Nifty holdabove 24000 levels.Stock futures looking good are Apollo Hospitals, Aarti Inds, Deepak Nitrate,MGL, Powergrid, Sun Pharma and ONGC. Stock futures looking weak areAshok Leyland, InduSind Bank, Indian Hotels, Polycab, Ramco Cement,Shriram Finance and Titan Inds.

(The author is a senior maket analyst and former vice- chairman, Andhra Pradesh State Planning Board)

Quote of the week

“It’s not whether you’re right or wrong that’simportant, but how much money you make when you’re right and howmuch you lose when you’re wrong.”

— George Soros

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