Range-bound trading more likely till Budget

A narrow rally till Union Budget leaves market vulnerable; No trading today for Eid al-Adha

Buoyed by moderate domestic inflation data, expected US Fed meeting outcome on the back of US and domestic inflation, positive global markets and renewed FIIs buying; the domestic stock markets extended the winning run for the second consecutive week with benchmark indices hitting fresh record highs during the week ended. BSE Sensex added 299.41 points or 0.39 percent to finish at 76,992.77 points, while NSE Nifty gained 175.45 points or 0.75 per cent to end at 23,465.60 points. During the week, the Sensex and the Nifty touched their fresh record highs of 77,145.46 and 23,490.40, respectively.The BSE Small-cap index surged five per cent and touched a new record high of 51,259.06. The BSE Mid-cap Index hit a fresh high of 46,088.09 and gained 4.4 percent. Among sectors, Capital Goods index added 6.4 per cent, Realty index gained 5.4 per cent, Telecom index gained nearly four per cent, and Oil & Gas index rose 3.5 per cent each. During the week, FIIs bought equities worth of Rs2,030.83 crore, while DIIs also bought equities worth Rs6293.38 crore. Overall, FPIs withdrew a net amount of Rs26,428 crore from equities in 2024 so far. However, they invested Rs59,373 crore in the debt market. The Indian rupee closed 18 paise lower at 83.56 on June 14 against its June 7 closing 83.38. WPI inflation data showed an increase for the third straight month to 2.61 percent in May on a year-on-year basis as against 1.26 percent a month ago.

Post General Elections outcome and formation of NDA 3.0, after initial heightened volatility, the stock indexes moved to record highs and market volatility has been exceptionally low in last few sessions. The economy has remained stronger than almost anyone predicted. Part of the problem with a strong economy and calm markets is that they create an environment, in which investors let their guard down and turn to risker, more speculative investments in their hunt for fat returns. A narrow rally from here on till Union Budget leaves the market vulnerable if a few of the biggest companies can’t meet the lofty expectations priced into their valuations for Q1 results. In the near-term, the market is likely to be range bound since there are no major triggers till the Union Budget. Market participants would be keenly tracking the release of the 100-day plan of various ministries. Last week, the Defence Ministry’s announcement of increasing military exports to Rs50,000 crore sparked a rally in defence stocks. This week will be a holiday-shortened one as the market will be shut for trading on Monday due to Eid celebrations.

When it comes to investing, nothing will pay off more than educating yourself. Do the necessary research and analysis before making any investment decisions.

F&O / SECTOR WATCH

On the back of narrow rally with weak strength, the derivatives segment witnessed erratic volumes in both index and stock futures. Old timers feel that the markets have been driven much more by greed recently than by fear. The problem is that the longer that goes on, the more fragile it becomes. Resistances for the Nifty above 23,500 are at 24,000 and 24,200. Supports below 23,200 are at 23,000 and 22,600. The Put Call Ratio (PCR) of weekly and monthly options stood at 1.3 and 1.2, respectively. A ratio greater than 1 is because of a greater number of Put option selling and traders sell Puts if they are bullish. For Bank Nifty, resistances above 50,250 are at 51,000 and 52,000. On the other hand, the notable supports below 49,530 are at 48,400 and 47,500. Bank Nifty options do not show any indication as the PCR of both weekly and monthly options are about 1. The India VIX has fallen nearly 40 per cent from its recent highs to 14-16 levels. The short-term outlook is positive and market players expect the indices to rise further from current levels. Stock futures looking good Adani Ports, BEL, GMR Infra, Indian Hotels, Nalco, SAIL and UPL. Stock futures looking weak are Bajaj Finserv, Metropolis, Page Inds, Tata Consumer and Wipro.

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

CIE Automotive India Ltd

CIE Automotive India Ltd is part of the CIE Automotive Group of Spain and is the CIE Automotive Group’s vehicle for its forgings business globally. The company is a multi-locational and multi-technology automotive components company with manufacturing facilities and engineering capabilities of its own and its subsidiaries in India and in Germany, Spain, Lithuania, and Italy in the European continent as well as a plant in Mexico, North America. It has an established presence in each of these locations and supplies to automotive Original Equipment Manufacturers (OEMs) and their Tier-1 suppliers. The company is selling its truck forgings business in Germany to focus on the car forgings business out of Spain & Lithuania, especially managing the transition to Electric Vehicles (EVs). The company supplies components mainly to the light vehicles and heavy truck markets with a comparatively small business in the offroad sector. In India, the company is more diversified and supplies components to the light vehicles segment (both passenger vehicles and light commercial vehicles), two wheelers, tractors, medium and heavy commercial vehicles, in order of dependence.

Key customers include M&M, Maruti Suzuki India Limited, Tata Motors, Tata Motors (EV), Hero, Bajaj, HMSI, TVS, Ford, GKN, NTN, Nexteer, Rane NSK, KIA (EV), Hyundai, PSA Stellantis (EV) and Ola Electric (EV). EV order book in India covers Aluminum & steel forgings, gears, stampings & composites parts for e2W, e3W and e4W. The company has been investing in additional capacities to cater to the EV order book. Buy on declines for target price of Rs900 in medium term.