Indian stock market ended the week on a flat note with a negative bias. A sharp recovery in Auto, Pharma, and Realty stocks supported the benchmark indices. For the week benchmark Nifty contracted marginally by 0.5% while investor’s wealth grew modestly by ₹500bn during the week. Nifty could remain in the 15578—15899 band in the coming week while Bank Nifty can be in the range of 34000—36000.
Markets traded under pressure for the second consecutive week amid mixed Global and Domestic cues. Reliance Industries lost the most in terms of market value. Midcap and small-cap stocks outperformed. The coming month will witness lot of IPO actions. Amidst market volumes that were the highest in 6 weeks. Concerns about the fast-spreading Delta variant and regulatory actions in China offset optimism around quarterly earnings season and economic recovery could be the key triggers to watch in the coming week.
Sector wise update
Nifty IT index hits fresh lifetime highs as IT company stocks in Indian Markets were on a bullish trend. Heavyweights were the major drivers as the outlook remains positive for the sector. TechM rallied after announcing its financial performance for the June 2021 quarter. Also, the performance is domestic IT stocks takes doesn’t take much ques from technology stocks globally as they were being on a roller coaster ride.
Like IT, Nifty Metal is also at historic highs amid the June 2021 quarterly earnings announcements and improved business outlook for the sector. Also, broader bullish markets further lifted the index ahead of F&O expiry. Heavyweights Adani Enterprises, Ratnamani led the gains while Vedanta and Nalco were also among the top performers. APL Apollo stocks also hit new highs after the announcement of bonus issue proposal.
Nifty Media stocks also rose amid the subdued performance from the major indices. The stocks were in the fast lane as the restrictions further eased in many states. Multiplex owners chains PVR and INOX LEISURE also advanced as they re-open theatres in locations where permissions have been granted in a staggered manner, in line with the safety protocols and strong focus on vaccination of the staff.
Nifty Pharma benchmark indices traded in the fast lane despite the steep rise in Covid-19 active cases in some states of India as investors were upbeat on the pharmaceutical sector on exchanges. June 2021 quarterly earnings and vaccination drive continues to list sentiment in pharma stocks. Also last week, On Thursday US President Joe Biden stepped up actions to tackle the rapid spread of Covid-19’s Delta variant.
Nifty FMCG benchmark indices traded higher after the stocks like Marico, Dabur, and Jubilant Food works continued the winning streak. Whereas Nestle India and Colgate Palmolive dragged post quarterly earnings.
Now, what’s ahead???
Nifty trapped in a slender range of 500 odd points, and also the markets have corrected sharply before the expiry day on the back of negative cues from global peers. However, the index has recovered from the support of 15500. FII’s have been sellers in equities throughout the week and have sold equities worth over 19000 crores in the month of July series. The index has consolidated within a broad range of 15500—15950 and the options data indicate the consolidation could continue in the near term. Traders are advised to trade with a stock-specific approach until there’s clarity on the direction.
Events that may add volatility, Need to be watched
*2nd August 2021 – Monday – Nikkei Markit Manufacturing PMI (Jul)
* 2nd August 2021 – Monday – Trade Balance, Exports, Imports.
*4th August 2021 – Wednesday – Nikkei Services PMI (Jul)
* 5th August 2021 – Thursday – Weekly Expiry
*6th August 2021 – Friday – Interest Rate Decision, Reverse Repo Rate, Cash Reserve Ratio.
* FII and DII participation
*Corporate quarterly results
Technical View on Benchmark Indices
Nifty faced resistance near to its previous week’s high level and from that vicinity of the 15880, it slipped at reach to its lower end of the range of 15500. Some follow-through buying was seen at that level but the index closed somewhere in the mid of its trading range which is around 15763.05 (Spot level).
At the starting of the week, the index continued to be weighed down by negative global cues and was further pressured on Wednesday. We also have the end of the July series, and this is one of the dull series as the index is trapped in a slender range of 500 points. Nevertheless, spot prices have seen to found acceptance above the 50-Day EMA but any directional view is not clear yet.
While looking at the technical front, we can see that Nifty has captured critical resistance at 15880—15962 zone which is the convergence of pivot-point one-month R1 and Bollinger band one-hour Upper. A firm break above the latter will open gates towards the 16200 levels and if buyers seize control above that barrier, then we can move towards the 16300—16400 levels.
The confluence of the EMA 50 monthly pivot point at 15500 is the last line of defense for Nifty bears. The next healthy support cluster is stacked up near 15350—15100, which will offer an immediate cushion to the downside.
Nifty spot closed at 15763.05 this week, against a close of 15856.05 last week. The Put-Call Ratio has decreased from 1.15 to 1.09. The annualized cost of carrying is positive at 1.22. The Open Interest of Nifty Futures decreased by 0.16%. Looking at the Derivative Overview Nifty Current month future closed with a discount of 21.95 points against a premium of 36.10 points to its spot. Next month’s future is trading at a premium of 62.95 points.
On the Options front, since it is the beginning of the new series, the options data is scattered at various far strikes. Maximum Put open interest was seen at 15,000 followed by 15,500 strikes. While maximum Call open interest was seen at 16,000 followed by 15,800 strikes. Options data suggest the Nifty has a broader trading range of 15,500—16,000.
Nifty Future strategy for the day
Resistance comes at 15880 and support lays down at 15750.
Strategy – Fresh Buy above 15880 for the targets of 15960—16050 on the upside, or Sell below 15750 for the downside target of 15650—15550.
Throughout the July series, like Nifty, we have not seen any pertinent directional move in the financial benchmark indices Bank Nifty too, as it has traded in a range of 2000 points. It has also disappointed the traders giving the dull weekly close. The weekly price action has formed a low wave candle which is within the previous week’s range signaling the lower highs formation from the last three weeks price action.
On the lower timeframe chart, index is trading below the 200-period EMA. And on the daily chart it is trading below the 55-period EMA indicating some supply zone from the highs.
For the coming week, 34000—36000 can be see as an immediate trading range where 36000 will act as the hurdle on any upside whereas on the fall 34000 will provide support cushion to the index.
Banking stocks also traded on the subdued notes and even though the broader markets term was bullish. Bank Nifty has defied the trend as investors bet cautiously in the sector, and also the lenders acquire a certain amount of equity ownership in IBBIC Private Limited. The equity ownership of IBBIC aimed at providing DLT solutions for the financial services sector.
Bank Nifty index Open Interest Put Call Ratio trading at 0.80. Maximum Call Open Interest seen around 35000 levels followed by 35200 levels. While maximum Put Open Interest seen at 34500 levels.
Nifty Bank Futures strategy for the day
Resistance at 35200 and Support at 34200.
Strategy – Either buy above 35200 for the targets of 35600—35900 or Sell below 34200 for the downside target of 33900.
Top Stocks Recommendations
The stock formed a bullish pattern and ready for the fresh breakout levels. It is looking strong on the daily chart for a huge upside move-in days to come.
Traders can buy above 125 for the upside move till 135 and then to 140 levels in days to come. Support and stop loss below 115 on a closing basis.
BAJAJ AUTO (FUTURES)
BAJAJ AUTO (AUG) contract formed a pennant pattern on the Hourly chart. After the bullish long candle price consolidated in a small range. This bullish continuation pattern indicates, that if the price breaks the upside level of 3865 then it can touch the level of 3945 in upcoming days.
Recommendation: BAJAJ AUTO (AUG) contract Buy above 3865 levels for the first target of 3905 & further target of 3945. maintain stop loss below 3820.
Traders can trade safely in benchmark indices and top stock recommendations with levels only. More will update during market hours on our Telegram Channel and to our WhatsApp followers.
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