Weekly Big Picture – Key Indices Fail to Cling on to Higher Levels

MarketSmith India _ Weekly Big Picture

MARKET PULSE

Status: Confirmed Uptrend

Current Outlook:

– Market environment conducive for new purchases, but remain selective.

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

– Stay disciplined and exercise sound buy and sell rules.

Highlights:

NSE – One up day, four down days

BSE – Two up days, three down days

Weekly Market Review

Even though crude oil prices recovered from 10-month lows, this week, most Asian indices posted weekly gains. The Indian indices showed a divergent trend, with Nifty ending the week on a loss; whereas the Sensex ending in a positive territory. Indecision, at the top, was the underlying theme that played out during the week, as indices failed to cling on to higher levels.

News, regarding the relaxation in tax return filing time after GST implementation, is expected, from July 1; and further progress, in NPA resolution, supported the markets to some extent, during the start of the week. Political developments in Europe, particularly French parliamentary elections, supported the markets to an extent.

The Nifty opened the week at 9,626.40 and traded in the range of 9,565.30-9,698.85. It finally closed for the week at 9,574.95, down 13.10 points or 0.14% from previous Friday’s close. The Sensex, however, gained 81.81 points or 0.26%, during the week, to end at 31,138.21. It started the week at 31,168.98 and traded in the range of 31,110.39-31,522.87.

The distribution day count, for the Nifty and Sensex, continues unchanged from last week at 2.0 and 3.0 respectively. For the Sensex, a distribution day was dropped, due to ageing; however, the index picked up a distribution day in today’s trade. The Indian market remains in a Confirmed Uptrend.

In the broader market, the Nifty Midcap and Smallcap indices ended their winning momentum and lost 1.76% and 2.05%, respectively, during the week.

The MarketSmith India IND 47 Index, which lists the top 47 stocks in chart and fundamental characteristics, lost 1.65%, this week.

The sector chart put on a battered picture, with only four indices ending in green, whereas the rest recorded significant losses. The Nifty FMCG, Financial, and Bank indices gained 0.96%, 0.19%, and 0.17%, respectively. On the flip side, the Nifty Realty, Auto, and Media indices were at the bottom of the list, with losses of 2.77%, 2.13%, and 1.83%, respectively.

Trading for the week began on a strong note, as the key benchmark indices opened with an upward gap on upbeat global markets, and stocks continued to advance as the day’s trade progressed. Globally, the focus was on political events in Europe as negotiations by the U.K. Brexit Secretary, David Davis, with the European Union began, and the results of French parliamentary election. Markets witnessed a quiet session of trade, on Tuesday, tracking Asian peers amid speculation on whether China would be added to the MSCI emerging markets index on the fourth try.

On Wednesday, markets shut shop with small losses on negative global cues. The indices recovered from its intraday lows, as reports that came out during the day indicated a limited impact on the Indian market, from MSCI’s addition of China “A” shares to its Emerging Market Index. The reports put outflows from the Indian market, due to MSCI’s move at just about USD 200 million.

On Thursday, the benchmark indices made impressive gains, during the day; however, ended on a flat note. Both benchmark indices had posted gains of 0.8%, each intraday, tracking positive global market and on hopes of more foreign inflows after the capital markets regulator said, “it aims to ease norms for foreign portfolio investments.” It also moved to relax rules for the purchase of distressed assets to attract investors and help banks dispose stressed companies.A stint of volatility was visible, on Friday, as the benchmark indices closed sharply lower.

Major Events Scheduled for Next Week

U.S – Q1 GDP – Thursday, June 29, 2017

China – Manufacturing PMI – Friday, June 30, 2017

Apart from the US GDP number and Chinese PMI data, there are no other major events scheduled for the upcoming week that could have an impact on markets.

Leaders Up on Volume: Suprajit Engineering (+11.60%), Balkrishna Industries (+10.26%), and IFB Industries (+8.92%)

Leaders Down on Volume: Rane Holdings Ltd (-8.14%), Astral Poly Technik (-1.50%), and Mahindra Holidays (-0.06%)

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