Equity markets ended the week with strong gains on the back of better than expected economic data globally and reports of a potential COVID-19 vaccine.
The Nifty50 recorded its third consecutive week of gains. The index closed with gains of 2.1 percent while the S&P BSE Sensex rose 2.4 percent for the week ended July 3.
On the broader markets front, investors preferred to book profits as the S&P BSE Mid-cap index was up 0.2 percent while the S&P BSE Small-cap index was down 0.21 percent in the same period.
While experts are of the view that the current market momentum may continue in the near-term, concerns over rising coronavirus cases and chances of the second round of lockdown along with trade tensions between US-China continue to linger.
Here is what experts have to say about the market.
Sanjeev Zarbade, VP PCG Research, Kotak Securities
It was a good week for global equities as concerns over reports of a resurge in COVID-19 infections in the United States were offset by improving macroeconomic data points as reflected by the strong non-farm payrolls data in the US.
The mood of the market remained buoyant, bolstered by an uptick in activities and consumption. Infosys, TCS and HDFC were among the top gainers while Sun Pharmaceuticals, NTPC and Power Grid lost ground in the BSE-30 Index.
Foreign Portfolio Investors (FPIs) sold equities worth $690 million over the past five trading sessions while Domestic Institutional Investors (DIIs) bought $730 million worth of equities in the same period.
After a period of sustained one-way movement, it is natural for investors to get complacent. They should guard against this. Risks to the markets emanate from further spiraling of infections and flare-up on the Indo-China border.
Dharmesh Shah, Head – Technical, ICICI direct
“In the coming weeks, we expect the index to resolve higher and extend the ongoing up move towards 10,900 which is a confluence of 200-days SMA, placed at 10,890, coincided with negative gap seen during mid-March (10,827–10,752),” said Shah.
During the ongoing major up move since March low of 7,511, barring one instance, the index has not corrected for more than two consecutive sessions.
Shah expects the index to maintain this rhythm of not correcting for more than two sessions. He believes, any temporary breather from hereon should be used as an incremental buying opportunity in quality stocks.
“The formation of higher peak and trough underpinned by improving market breadth makes us confident of revising support base on Nifty at 10,200 as it is 38.2 percent retracement of last major up move (9,544 – 10,553), at 10,168 and in three out of past seven sessions, Nifty bounced from 10,200 mark, indicating elevated support at last week’s low of 10,200,” said Shah.
Siddharth Khemka, Head – Retail Research, Motilal Oswal Financial Services
The current market momentum may continue in the near-term as the market factors the positive macro-economic data, the onset of monsoon and optimism over potential COVID vaccine.
However, concerns over rising coronavirus cases and chances of the second round of lockdown along with trade tensions between the US-China continue to linger.
Hence, traders should look at booking profits at regular intervals. Further crucial Q1FY20 result season would kick start from next week with TCS reporting on July 9, which would be keenly tracked.
Nifty has given a consolidation breakout and has managed to close above its recent swing high of 10,553 on June 24.
Nifty closed above 10,600, its highest level since March 9, 2020 (64 sessions), indicating that bulls are gaining strength and supports are gradually shifting higher.
Technically, Nifty may continue its up-move towards 10,800 with supports placed at 10,450-10,330 levels.
Jyoti Roy, DVP Equity Strategist, Angel Broking
While global markets and macro data were supportive during the week gone by, there is a possibility of increased volatility in the coming weeks due to an increase in COVID-19 cases globally led by a resurgence of new cases in the US.
India, too, has witnessed an increase in new cases over the past month which coincided with opening up of the economy as a result of which the Government has delayed further opening up of the economy as of now while various state Governments are imposing localized lockdowns in the worst affected areas.
Ajit Mishra, VP Research, Religare Broking
In the coming week, participants will be eyeing key macro indicators like IIP data, CPI and WPI inflation. Besides, the progress of monsoon and developments on the COVID-19 front will also be in focus.
On the earnings front, IT major, TCS, will announce its results on July 9. Interestingly, the stock has witnessed tremendous buying interest in the last two weeks and reached closer to its record high before the results.
“We expect Nifty to take a breather around 10,750 level, after the three successive weeks of advances. Though the benchmark is inching higher gradually, the underperformance of the banking pack is still a major concern. We advise keeping a close watch on the banking index for the sustainability of the prevailing up move. Meanwhile, traders should maintain their focus on stock selection and risk management,” Mishra said.
Vinod Nair, Head of Research at Geojit Financial Services
Globally, the US monthly employment report and domestically the PMI survey seemed to indicate that the worst of the lockdown economic impact is over.
However, any extension or resetting of lockdown measures, due to increasing infections, could negate the gains.
Progress of a vaccine trial has also added to the optimism.
“In spite of improving economic data, markets are still largely moving on hope rather than on any real change in the ground realities. With intra-day volatility increasing, investors are advised to remain cautious,” Nair said.
Rohit Singre, Senior Technical Analyst at LKP Securities
Nifty closed the week with gains of more than 2 percent, forming a bullish candle on the weekly chart.
The index has good resistance near 10,700-10,800 zone and one can use mentioned levels to book profit on every rise, good support is shifted at 10,500-10,400 zone so until holding above said levels we may see strength to be there and one can use buy on dip strategy around said levels.
The Nifty bank closed a week again below 22,000 mark at 21,852 with gains of 1.21 percent. Support for Nifty bank is coming near 21,500-21,200 zone and resistance is coming near 22,300-22,500 zone.