The Indian equity market is experiencing a robust bull run, climbing steadily despite several challenges. Domestic equity benchmarks Sensex and Nifty 50 recovered from post-budget losses and added 0.9 per cent and 1.24 per cent, respectively, for the week, posting the eighth week of gains — registering their best weekly winning streak in the last 14 years (since 2010).
As markets prepare to start the new month, investors will keenly eye the next set of April-June quarter results for fiscal 2024-25 (Q1FY25), the upcoming US Fed interest rate decision, domestic and global macroeconomic data, corporate announcements, foreign fund inflow, crude oil prices, and global cues will drive market movement this week.
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The last week was marked by both volatility and resilience, with some profit booking ahead of the Union Budget announcement and a sharp dip on the budget day due to unexpected hikes in long-term capital gains (LTCG), short-term capital gains (STCG), and securities transaction Tax (STT).
However, from the budget day's low, the indices displayed a massive recovery, culminating in a remarkable performance on Friday - when Sensex and Nifty 50 snapped their five-day losing streak and logged their best session in seven weeks. The rebound was driven by heavy value-buying at lower levels and buoyancy in some mega-cap stocks.
Nifty 50 hit its new all-time high of 24,861.15, ending the week at 24,834.85, while the Bank Nifty declined for the third consecutive week, dropping nearly 1.86 per cent to close at 51,295.95. Sensex, however, narrowly missed setting a record high. Initial declines to a three-week low were driven by fundamental concerns following the increase in capital gains taxes and STT on F&O trades.
There were concerns on the Street about the midcap and smallcap segments following the hike in capital gains tax. However, the market shrugged off these worries, leading to solid gains in the broader market as well. In terms of sectors, the Nifty auto and Nifty pharma sectors were the standout performers, each gaining more than five per cent. Other sectors that performed well included IT, FMCG, and Oil & Gas.
On a positive note, the insurance sector also performed exceptionally well last week, driven by strong earnings, attractive valuations, and the absence of negative news in the budget. Domestic institutional investors (DII) were cautious ahead of the budget, sitting on cash. However, they returned aggressively after the budget, purchasing shares worth ₹1,000 crore.
"The Budget 2024-25 has not sparked any significant excitement in the market, while it was both populist and prudent…Many of the measures are a reiteration of the interim budget, and the broader market appears to be losing momentum due to a lack of new impetus,'' said Vinod Nair, Head of Research, Geojit Financial Services.
‘’DIIs continue to employ a "buy on dips" strategy, which contributed to market gains on the week's last trading day, particularly in the pharma, auto, metal, IT, and FMCG sectors. The market has now recovered its losses from budget day, driven by positive US GDP data and expectations of improved global demand. Moving forward, the direction of the domestic market will likely be influenced by the progress of the earnings season,'' added Nair.
Primary markets will witness intense action this week as some major initial public offerings (IPO) and listings are slated across the mainboard and small-and-medium enterprises (SME) segments. The week will be critical from the domestic and technical point of view as investors will track corporate results, global monetary policies, and macroeconomic data.
Overall, market analysts say that bulls are in control and the market is likely to witness further advances in the coming sessions. Nifty 50 is approaching the psychological mark of 25,000 and may move further to 25,400 in case of a strong bull run. Experts advise traders to remain selective, focusing on index majors and large midcaps.
Investors will be busy analyzing corporate earnings in the coming week as the next batch of Q1FY25 results are set to be released.
Shares of ICICI Bank, Punjab National Bank (PNB), Dr Reddy's Laboratories, NTPC, IDFC First Bank, IndusInnd Bank, REC, IndiGo, among few others are likely to react on July 29 as these companies announced their Q1FY25 results either on Friday post-market hours or on Saturday.
Starting from Monday, several major companies including ACC, Coal India, Bank of Baroda, Tata Steel, RITES, Adani Enterprises, Dabur, ITC, Dixon Technologies, MOIL, Indian Oil Corp (IOC), Hindustan Petroleum Corp Ltd (HPCL), among others will announce their Q1FY25 results this week.
The US Federal Open Market Committee (FOMC) meeting on July 31, is expected to maintain a dovish tone, keeping rates unchanged at 5.25 per cent-5.50 per cent. This aligns with recent dovish comments from Fed Chair Jerome Powell, citing cooler inflation data since June.
‘’The market is fully priced for a 25 bp rate cut in September, with 66 bps of rate cuts expected before the end of the year. This meeting could signal that a first rate cut is imminent, depending on the data,'' said Alex Volkov, Market Analyst at VT Markets.
In the mainboard segment, three new public issues open for subscription this week. Akums Drugs and Pharmaceuticals IPO will open for bidding on July 30, Ceigall India IPO will open on August 1 and Ola Electric IPO will open on August 2.
In the SME segment, seven new issues open this week. Sathlokhar Synergys E&C Global IPO, Bulkcorp IPO, Rajputana Industries IPO, Ashapura Logistics IPO, and Kizi Apparels IPO will open for subscription on July 30. Utssav Cz Gold Jewels IPO will open on July 31 and Dhariwalcorp IPO will open on August 1.
Among the ongoing SME IPOs, Clinitech Laboratory IPO, Aprameya Engineering IPO, and Trom Industries IPO will close on July 29. S A Tech Software India IPO and Esprit Stones IPO will close on July 30.
Among listings, shares of SAR Televenture FPO and RNFI Services will debut on NSE SME on July 29. On July 30, shares of V.L.Infraprojects will get listed on NSE SME and shares of VVIP Infratech will debut on BSE SME.
On July 31, shares of Chetana Education and Manglam Infra And Engineering will debut on NSE SME. On August 1, shares of Clinitech Laboratory will debut on BSE SME, while Aprameya Engineering and Trom Industries will debut on NSE SME. On August 2, shares of S A Tech Software India and Esprit Stones will debut on NSE SME.
Foreign institutional investors (FIIs) sold approximately ₹4,721.26 crore in the cash segment this week, while their monthly buying activity amounted to around ₹16,943.37 crore. Domestic institutional investors (DIIs) continued their buying streak, acquiring about ₹8,888.87 crore in the cash segment so far this month, with purchases of approximately ₹8,109.78 crore in the cash segment this week alone.
‘’Although the government's emphasis on fiscal discipline and growth is appealing, FIIs are cautious due to current high valuations and muted expectations for Q1FY25 results,'' said Geojit's Vinod Nair.
Foreign portfolio investors (FPIs) extended their buying streak to July after turning net buyers last month as stability returned to Indian markets. FPIs invested ₹33,688 crore worth of Indian equities, and the net investment stood at ₹49,204 crore as of July 26, taking into account debt, hybrid, debt-VRR, and equities, according to the National Securities Depository Ltd (NSDL) data. The total investment in debt markets stood at ₹19,223 crore in July.
Global market performance, particularly in the US, will also be closely watched. The outlook for the market will be guided by major global economic data such as US job openings data (June), China manufacturing PMI (July), US ADP nonfarm employment change (July), UK BoE interest rate decision (August), US ISM manufacturing PMI (July), and US nonfarm payrolls (July).
The US Federal Reserve is set to announce its interest rate decision on July 31, which will be crucial as the market anticipates a potential rate cut soon this year. US Federal Reserve's decision and economic projections will likely notably impact Indian and global markets, particularly the monetary policy outlook and inflation expectations.
The Bank of Japan (BoJ's) interest rate decision, scheduled for Wednesday, is another key event. In its last meeting in June, the BoJ kept short-term rates unchanged at 0-0.1 per cent, following a historic rate hike in March.
Analyst say that speculation is also rife that the BoJ might raise rates next week, with the Japanese interest rate market pricing in a 67 per cent chance of a 10 bps increase. However, the exact timing of the next rate rise remains a topic of hot debate.
Oil futures fell about 1.5 in the previous session, finishing the week lower on declining Chinese demand and hopes of a Gaza ceasefire agreement that could ease Middle East tensions and accompanying supply concerns.
Brent crude settled down $1.24, or 1.5 per cent, at $81.13 a barrel. West Texas Intermediate crude ended $1.12, or 1.4 per cent, lower at $77.16 a barrel. For the week, Brent was trading down more than one per cent while WTI fell beyond three per cent.
Shares of several major companies will trade ex-dividend in the coming week starting from July 29, while some will trade ex-bonus and ex-split. Shares of firms such as Vedanta Ltd, UltraTech Cement, Cipla, Maruti Suzuki India, HeroMoto Corp, Bata India, among others will trade ex-dividend, while Aurobindo Pharma will declare a buyback of shares. Check full list here
The weekly close suggests further upside potential, targeting 25,100 for Nifty. Support levels around 23,900-24,250 should cushion any downturns. ‘’While banking sector underperformance remains a concern, the focus should be on sectors aligned with the benchmark, including FMCG, pharma, IT, energy, and auto. Caution is advised in the midcap and smallcap segments, with selective stock picking recommended,'' said Ajit Mishra – SVP, Research, Religare Broking Ltd.
On the technical front, the Nifty is approaching the psychological mark of 25,000. ‘’If it manages to sustain above this level, we could see further market expansion. On the downside, the 20-DMA at 24,400 will serve as an immediate and strong support level, while the budget day's low of 24,074 has become a key support level for the bulls,'' said Santosh Meena, Head of Research, Swastika Investmart Ltd.
Arvinder Singh Nanda, Senior Vice President, of Master Capital Services Ltd agrees. ‘’Nifty index has formed a robust bullish candle on the daily chart, reaching a fresh all-time high. The immediate resistance level is at 25,000, and trading above this threshold could signal a strong bull market which can take the index towards 25,400,'' said Nanda.
‘’Conversely, support is identified at 24,500. The overall market structure remains bullish, indicating a buy-on-dips strategy. However, a break below the 24,500 level may suggest potential profit booking,'' he added.
According to Nanda, the Nifty Bank index has demonstrated a robust recovery following a period of profit booking and formed a strong Marubozu candle, indicating that it has bottomed out and is poised for a fresh round of buying.
‘’This bullish sentiment is expected to intensify if the index moves above 51,500, with resistance seen at 52,000. On the downside, support levels are 51,000 and 50,800. This formation suggests a potential shift in market sentiment, paving the way for renewed upward momentum,'' he said.
Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and individual circumstances may vary.
