Weekly Big Picture – Bulls Reign Over Market; Uptrend Resumes

Market Pulse:

Confirmed Uptrend

Highlights:

One down and four up days

Weekly Market Review:

Market sentiment remained buoyant, as India’s major indices brought home solid gains for the second week in a row.

The Indian stock market brushed aside escalating trade war concerns and began the week on a robust note. The strong U.S. jobs report boosted the market sentiment.

Tuesday turned out to be special day for the investors, as a strong up session led to the change in the market direction. The Nifty reclaimed its previous rally high of 10,929.20, allowing us to change the market outlook to a Confirmed Uptrend.

Bulls took a breather on Wednesday, as the benchmark indices posted minuscule gains of 0.01% and 0.07%, respectively. Asian markets tumbled as President Donald Trump imposed a 10% tariff on Chinese goods worth $200B.

Major indices regained their bullish momentum on Thursday as falling crude oil prices boosted the investor sentiment. Crude oil prices plunged 6.9% to $73.40 as Libya resolved major disruption to its crude oil exports. The Sensex hit an all-time high whereas the Nifty reclaimed 11,000 levels.

However, market ended the week on a subdued note as late day selling wiped out the entire gains of the benchmark indices on Friday. Eventually, the Nifty and the Sensex ended an eventful week with weekly gains of 2.5% and 2.3%, respectively. Index heavyweight, Infosys reported its Q1 numbers after market hours. Revenue grew 5.7% y/y whereas net profit rose 2.1% y/y. The board also approved a 1:1 bonus share.

Broader market observed a divergent trend during the week as the Nifty Midcap posted a 0.2% gain whereas Smallcap dropped 0.2%.

On the sectoral front, strength was mainly spotted in the Nifty Energy (+7.6%) with Reliance Industries leading the pack with a weekly gain of 12.5%. The stock jumped 4.3% to scale a new high on Thursday. It became the second Indian company after Tata Consultancy Services to enter the $100B market cap club.

Other sectors like Nifty IT (+3.7%), and Financial Service (+2.1%) also had a decent week. On the downside, Nifty Media (-4.5%) and Metal (-1%) tumbled due to selling pressure.

MarketSmith India’s IND 47 index, our proprietary list of top 47 stocks in chart and fundamental characteristics, gained 1.8%.

On the economic front, the Indian government announced industrial production data for May and CPI inflation data for June yesterday. Retail inflation was up 5% in June compared with 4.87% in May. Industrial production growth slowed to a seven-month low of 3.2% in May down from 4.7% in April.

Talking about market direction, the distribution day count stands at four on the Sensex and five on the Nifty. The market condition is in a Confirmed Uptrend.

The following events lined up for the coming week could turn out to be market movers:

• WPI inflation data: July 16

• Q1 FY 2019 Financial Results for Bajaj Finance, Bandhan Bank, Bajaj Auto, Crisil, HDFC Bank, Hindustan Unilever, Kotak Mahindra Bank, Mindtree and RBL Bank

Current Outlook:

– Market environment conducive for purchases, but remain selective.

– Focus on fundamentally strong stocks breaking out of strong technical patterns.

– Stay disciplined and exercise sound buy and sell rules

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