Mkts lack follow-up buying

Buoyed by a good start to the Q1 earnings season from the IT sector, supportive macroeconomic data, improvement in monsoon progress and global cues; benchmark indices closed at all-time highs on weekly basis. The BSE Sensex climbed 753.87 points to 53,140.06 points, and the NSE Nifty rallied 233.60 points to 15,923.40 points, while the broader markets also participated in the weekly run as the BSE Midcap index was up 1.4 percent and Smallcap index gained 2.3 percent. However, lack of follow up buying was clearly visible at higher levels. Despite markets touching new highs, FIIs net sold Rs 2,667.16 crore of shares during the week, taking the total selling to Rs 6,923.61 crore in July. Observers feel if the FII selling continues in coming weeks, then the market could turn cautious again. DIIs continued to support the market. Punters say that to successfully garner funds by privatisation and disinvestment of PSUs, GoI has now become the

'operator' of markets. Sideliners say that markets will sustain the uptrend till the completion of LIC IPO. Despite attracting a huge influx of dollars in the form of Foreign Portfolio Investments (FPIs) and Foreign Direct Investments (FDI) in recent times; rising crude prices and fear of US taper has kept rupee very weak in comparison to other BRIC nations. Near term direction of Indian market will be dictated by Q1 earnings and management commentary on recovery, progress of monsoon, crude oil prices, macroeconomic data and global cues. It is pertinent to observe that the US stocks fell and snapped a three-week winning streak during the week ended as data showed that consumer sentiment dwindled in early July, driven in part by concerns of high inflation.

Factors to watch out for in coming months in global markets - Equity markets have already priced in positive news around vaccine rollouts and any delay in vaccine progress may trigger spikes in market volatility. Extensive talks regarding inflationary trends since January have put the focus back on interest rates, however, policymakers continue to support their respective stimulus programmes keeping interest rates lower for longer. Important corporates announcing their Q1 numbers in the coming week are ACC, HCL Technologies, HDFC Life, Asian Paints, Bajaj Finance, ICICI Prudential Life, Bajaj Finserv, Bajaj Auto, Hindustan Unilever, Ultratech Cement, Ambuja Cements, JSW Steel, Reliance Industries, ICICI Bank and ITC. Other notable companies to keep track are Nippon Life, Ceat, Gland Pharma, Havells India, Jubilant FoodWorks, Biocon, Hindustan Zinc, ICICI Lombard, IEX, IndiaMart, India Pesticides, Wockhardt, Federal Bank, SBI Cards and United Spirits.

Heard on the Street: The strong response to the Zomato's Initial Public Offer (IPO), India's first unicorn listing on the main board, holds a cause for both cheer and concern on the equal measure. On the positive side, the over-subscription busts the myth that Indian investors, even domestic institutions, lack the risk appetite needed to bet on new-age technology businesses that rely on cash burn to acquire a critical mass of customers. On flip side, even by global e-commerce standards, Zomato's valuation is steep at 29 times sales for a cash-guzzling business with no clear runway to profitability in the foreseeable future. The brisk market in short-term IPO funding and the rash of demat account openings suggest newbie investors being swept up in the frenzy. Likewise, it may not be correct to assume that all the institutional investors are in this for the long haul. In the past, institutions have proved to be as fallible as retail investors in high profile IPOs. Whilst there is no shortage of IPO candidates and the upcoming quarter is looking very busy across sectors, the abundance of investment opportunities is likely to make investors more selective and price sensitive, reflecting on recent aftermarket performance. Retail investors globally are becoming a more prominent feature of the equity markets and should not be considered a lockdown-phenomenon. With the ease of technology and reduced costs of trading, retail investors contribute to a significant volume of the secondary market trading. Retail demand

particularly around large consumer focused brands can no longer be ignored and may provide additional momentum to the IPO markets going forward. But as more and more firms queue up to raise capital, investors, especially retail ones, need to be cautious. Once the euphoria dies down, there could be some pain in store for investors of some of these IPOs.

Quote of the week: It's not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for-- Robert Kiyosaki

If you're a millionaire by the time you're 30, but blow it all by age 40, you've gained nothing. Grow and protect your investment portfolio by carefully diversifying it, and you may find yourself funding many generations to come.

F&O / SECTOR WATCH

Mirroring the undercurrent in the cash market, derivatives segment witnessed stock and sector specific moves. On option front, the maximum Put Open Interest was seen at 15,900 strike followed by 15,800 and 15,700 strikes, while maximum Call Open Interest was seen at 16,000 followed by 16,500 and 16,200 strikes. Call writing was seen at 16,000 strike followed by 16,500-16,200 strikes, while Put writing was seen at 15,300 strike followed by 15,900 and 15,700 strikes. Option data indicates an immediate trading range for the Nifty at 15,700-16,200 zones. The Bank Nifty has been showing promising move, but lack of follow-up buying has kept it below 36,000 strike. Chartists say compared to the Nifty, the Bank Nifty has a stronger higher high higher low formation, which is a bullish indication. Near term target can be 36,800 points. The Implied Volatility (IV) of Calls closed at 11.62 per cent, while that for Put options closed at 12.07 per cent. The Nifty VIX for the week closed at 12.27 per cent. The Volatility index is getting lower and lower with every passing trading session, indicating a sideways to positive movement for domestic markets in the coming few days. PCR of OI for the week closed at 1.42. One sector which can drive the markets from here on is financials.

HDFC Bank is the first major lender in India to report results as the nation emerges from a second coronavirus wave that shuttered businesses and led to millions losing jobs. While the country's most valuable bank has been less impacted by the severity of the pandemic on its asset quality, it saw its retail loans shrink by one per cent in the June quarter from three months prior even as its overall loan book growth stayed robust at 14.4 per cent annually.

The commentary has not been overly negative but reflected the impact of Covid-19, including changes in customer behaviour and pandemic fears, as well as restrictions on business and individual activities. The results give confirmation of the fact that the private sector banks and NBFCs have handled the stress well. The Pension Fund Regulatory and Development Authority (PFRDA) has amended for foreign companies to hold — directly or indirectly — up to 74 per cent stake in pension funds notifying the new revised limit. Foreign investment limit in pension funds was earlier capped at 49 per cent. The Pension Fund regulations expect heightened interest in insurance counters. Stay overweight in the sector. Sebi has modified margin related processes for those selling shares in the stock market. No more do stock brokers need collect upfront margin from sellers in the cash segment. They can ask the depository player holding a client's demat account to block the shares intended to be sold and release them at the end of the day if the sale does not happen. Stock futures looking good are Havells, HDFC Life, L&T, Sun Pharma and Tata Power. Stock futures looking weak are APL, Eicher Motors, Metropolis, Tata Motors, Titan Inds and Trent.