Stock Market News: The domestic benchmark indices, Sensex and Nifty 50, finished Friday’s session on a bleak note since they were unable to recover their losses. In the last hour of trading, Nifty 50 managed to close above the dotted lines despite a lackluster day’s progress.
Gains in energy stocks helped the Nifty 50 achieve a new closing high for the fourth time this week, as it finished the day up 0.09% at 24,323.85. Although the Sensex ended the week at 79,996.6 points, down 0.07%, it was nevertheless able to replicate this week’s 1.2% increase in the Nifty 50 and a fifth week of gains.
However, the Nifty Midcap 50 index and the Nifty Smallcap index, which closed 0.78% higher apiece and completely outperformed the benchmarks, were speaking of a different narrative on broader markets.
The primary silver lining, as far as market analysts are concerned, is that the India VIX kept falling, closing at 12.69, down 1.32%. All eyes will be on the forthcoming Union Budget, which is expected to be tabled somewhere between July 23 and 24, during the Monsoon Session. The Q1 corporate earnings season, which begins this week, will take center stage before that.
According to Prashanth Tapse, Research Analyst, Senior Vice President of Research at Mehta Equities, the positive catalyst is liquidity. The FIIs, too, bought to the tune of ₹6,875 crores in last week’s trade. Also helping sentiments were waves of optimism that the upcoming Union Budget will likely boost consumer spending and infrastructure building; increasing bets into the narrative that a soft landing in the US is underway; and a softer June jobs report raises us rate-cut bets.
This following week will be crucial since China, Germany, and the US will all be releasing important statistics. The main event on Thursday will be the US inflation data, which might have an impact on market mood and Fed rate decisions, highlighted Alex Volkov, a market analyst at VT Markets.
Market Outlook by Dharmesh Shah, Vice President, ICICI Securities
The index started the week on a positive note and gradually inched northward as the week progressed. As a result, Nifty 50 endured it record setting spree over fifth consecutive week. The weekly price action resulted into bull candle carrying higher high-low, indicating continuation of uptrend. In the process, Nifty midcap and small index recorded fresh All Time Highs.
Going ahead, we expect Nifty 50 to continue to trade with a positive bias and gradually head towards our earmarked target of 24,700 by July 2024. Key point to highlight is that, past five week’s sharp up move of 15% has hauled weekly stochastic oscillator in overbought territory (placed at 95).
Thus, possibility of temporary breather at higher levels cannot be ruled out ahead of budget coupled with onset of Q1FY25 earning season. Hence, any dip from hereon should not be construed as negative instead capitalised it as buying opportunity as key support is placed at 23,700. Our positive bias is further validated by following observations:
A) The formation of higher peak and trough supported by sturdy market breadth signifies inherent strength (currently 86% of stocks trading above 50 days EMA).
B) Global set up continues to remain strong footing and barring minor retracements does not flag bigger volatility.
Sectorally, BFSI, IT, Oil & Gas, Capital Goods & Infra, Pharma, PSU, are expected to do well.
Structurally, the elongation of rallies followed by shallow retracement signifies buying at elevated support base that makes us revise support base at 23,700 as it is 20 days EMA coincided with 61.8% retracement of past two weeks up move 23,350-24,401
On the Bank Nifty front, we expect index to consolidate in 53,500-51,000 range amid overbought condition of weekly stochastic oscillator.
Top Stock Recommendations
Buy State Bank of India (SBI) in the range of ₹835-862 for the target of ₹965 with a stop loss of ₹788.
Buy Aditya Birla Fashion and Retail Ltd in the range of ₹320-330 for the target of ₹374 with a stop loss of ₹299.
Disclaimer: The Research Analyst or his relatives or I-Sec do not have actual/beneficial ownership of 1% or more securities of the subject company, at the end of 05/07/2024 or have no other financial interest and do not have any material conflict of interest.
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