Market Pulse:
Highlights:
Two up and three down days (one distribution day)
Weekly Market Review:
In a highly volatile market, the Nifty and the Sensex swung between gains and losses after WPI inflation inched closer to 6%.
However, a decline in crude oil prices helped both the indices to limit losses at 0.1%. In the end, the market bears outpowered the bulls to snap a two-week winning streak.
The week began on a subdued note as economic woes dented the market sentiment. Amid rising fuel prices, the wholesale inflation soared to 5.77% in June, the highest in more than four years. Market sentiment remained weak on Monday amid increasing chances of an interest rate hike by the RBI in its August meeting.
On Tuesday, Nifty resumed its rally as Brent crude oil prices declined 4.6% to $72.30 overnight. The decline was due to reports suggesting Saudi Arabia and the U.S. are likely to prevent the oil shortage caused by President Donald Trump’s sanctions on Iran.
But as the market was about to regain its strength, the political drama played a spoilsport. The announcement of a no-trust motion against the BJP government on Wednesday triggered a reversal, with both the composites witnessing fresh distribution. Earlier in the day, the Sensex had opened at a record high.
Investors opted for a cautious stance on Thursday as the Indian market observed yet another dull day. Both the Nifty and the Sensex slipped 0.2% and 0.1%, respectively
As they say, all is well that ends well – the Indian market bounced back strongly on Friday. Both the Nifty and the Sensex jumped 0.5% and 0.4%, respectively. Also, the Nifty reclaimed the 11,000 level. However, the Indian rupee hit a record low of 69.13 on Friday.
The broader market continued to lag as the Nifty Midcap and Smallcap posted a weekly loss of 1.1% and 2.4%, respectively.
On the sectoral front, the Nifty Energy (+1.7%) continued to outperform amid falling crude oil prices.Sectors like Nifty IT (+1.2%), and PSU Bank (+1.4%) also had a decent week. On the downside, Nifty Metal (-5.9%) and Pharma (-2.9%) tumbled due to selling pressure.
MarketSmith India’s IND 47 index, our proprietary list of top 47 stocks in chart and fundamental characteristics, dropped 2.5% on account of weakness in the broader market.
Talking about market direction, the distribution day count stands at five on the Sensex and six on the Nifty. Despite a high distribution count, the market remains in a Confirmed Uptrend considering a low overhead supply. The Sensex closed 0.7% below its all-time high while the Nifty ended 1.4% below its lifetime high. Moreover, we are set to lose two distribution days on both the indices due to age next week.
In other news, PSU Bank stocks were in the limelight as the Finance Minister approved an infusion of Rs 11,336 crore in five state-owned lenders to help them meet the regulatory capital requirement. The infusion is a part of the remaining Rs 65,000 crore out of the Rs 2.11 lakh crore recapitalization plan over two financial years.
The following events lined up for the coming week could turn out to be market movers:
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Q1 FY 2019 Financial Results for Acc, Bank Of Baroda, Dr Reddys Laboratories, Itc, Icici Bank, Kotak Mahindra Bank, Larsen & Toubro Infotech, Maruti Suzuki India,RBL Bank, Tata Elxsi and among others.
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Derivative expiry for the month of July: July 26, 2018.
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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