Weekly Market Wrap: IT stocks propelled D-street into a higher orbit amid positive global cues. What lies ahead?

In the passing week, Indian equity markets ended with gains of over a per cent as India’s industrial production growth measured in terms of the Index of Industrial Production rose to 5.2 per cent in May. Besides, the wholesale price index deflated for the third straight month in June. Besides the Positive global cues, amid expectations that the US Federal Reserve may pause rate hikes after July, also gave a fillip to domestic market sentiments.

The BSE Sensex surged 780 points, or 1.2 per cent, at 66,060.9 during the week ended July 14, while the Nifty gained 233 points, or 1.2 per cent, to 19,564.5. As many as 31 stocks in the Nifty 50 index delivered a positive return for investors in the week. With a gain of 7.1 per cent, Infosys emerged as the top gainer in the index. It was followed by Tech Mahindra (6.3 per cent), Hindalco Industries (5.8 per cent), Tata Consultancy Services (5.6 per cent), and Eicher Motors (5.1 per cent). Tata Steel, Reliance Industries, Sun Pharmaceutical Industries, and Oil & Natural Gas Corporation also advanced by over three per cent. On the other hand, Power Grid Corporation of India, UPL, and Bharat Petroleum Corporation declined 6.1 per cent, 3.5 per cent, and 3.1 per cent, respectively.

Sector-wise, the BSE Information Technology index surged the most (4.9 per cent) during the week gone by. While BSE Metal and BSE Realty indices have registered a weekly gain of 3.3 per cent, and 1.7 per cent, respectively. On the other hand, the BSE Power index has registered a weekly decline of 1.9 per cent.

Market performance: Devarsh Vakil, Deputy Head - Retail Research at HDFC Securities said that the benchmark indices the Sensex and the Nifty settled at their fresh record closing highs on Friday on gains led by shares of IT majors. “Infosys, TCS, HCL Tech, and Tech Mahindra together contributed more than 100 points to the Nifty rally today. The Nifty IT added 1.45 per cent to 30056. This index has risen by 3.22 per cent in the past two sessions”.

He added “U.S. stock indices ended higher and recorded their fourth straight day of gains yesterday with the S&P 500 clearing the 4,500 mark for the first time since April 2022, led by technology stocks”, the US data showed June producer-price inflation fell further, bolstering the chances that the Federal Reserve is near the end of its campaign of interest-rate hikes.

For the week, Nifty was up by 1.2 per cent and it is the third weekly rise on the trot. BankNifty which underperformed for the entire week registered a sharp recovery in the last 45 minutes of the trade. For the short-term, support for the Nifty has shifted to 19500. As far as resistance is concerned Nifty could extend the current rally towards 19800, Vakil said.

Technical Outlook: 

Nifty: Nagaraj Shetti, Technical Research Analyst, HDFC Securities said “A long bull candle was formed on the daily chart with minor lower shadow. The chart pattern indicates an attempt of a decisive upside breakout of the narrow range movement at 19300-19500 levels for the last few sessions.” Nifty on the weekly chart formed a long bull candle that has negated the bearish candle of last week and closed higher. Hence, a confirmation of an upside breakout with a follow-through up move on Monday is likely to open more upside for the market ahead. 

Shetti added, “Having moved above the crucial resistance of 19500 (1.236 per cent Fibonacci projection of weekly taken from recent bottom-top bottom). As, per this pattern, the next upside target to be watched is around 1.382 per cent Fibonacci projection at 19800 levels, which is expected to be the next upside target for the Nifty for the coming week. Immediate support is at 19470 levels”. 

Bank Nifty: Rupak De, Senior Technical analyst at LKP Securities said “Bank Nifty is facing significant resistance at 45000, hindering its upward movement. As long as it remains below this level, a clear directional up move is unlikely. Support is established at 44700 on the lower end. The bullish crossover on the momentum indicator RSI suggests positive momentum. Going forward, the index may continue to consolidate with the bands of 44500-45000; any decisive breakout on either side may create a directional trend”.