Weekly Market Wrap: Sensex, Nifty surged for the fourth straight week amid mixed global cues. What lies ahead?

26 stocks in the Nifty 50 index delivered a positive return for investors in the week. With a gain of 5.5 per cent, Kotak Mahindra Bank emerged as the top gainer in the index.

Sector-wise, the BSE Bankex index surged the most (3.1 per cent) during the week gone by. While BSE Capital Goods and BSE Healthcare indices have registered a weekly gain of 2.6 per cent, and 1.8 per cent, respectively.
The options data suggests that the Bank nifty may remain range-bound as there is significant option selling observed at the at-the-money (ATM) strikes.

Dalal Street’s winning streak continued for the fourth straight week, driven by unabated foreign capital inflows. However, weak guidance from IT giant INFY triggered profit booking in the IT space, and price correction in Reliance ate most of the weekly gains on Friday. The key benchmarks made an optimistic start to the week on the back of a rally in banking stocks after HDFC Bank announced better-than-expected Q1 results. Sentiments also got a boost with the data from the National Securities Depository (NSDL) showing that foreign portfolio investors (FPIs) have remained net buyers in Indian stock markets for the fifth straight month.

Market performance: Vinod Nair, Head of Research at Geojit Financial Services said the domestic market witnessed a broad-based rally during the week, strengthened by encouraging domestic macroeconomic data and sustained inflows from FIIs. The unlocking of value by heavyweights (like RIL & ITC) also helped in appraising the main indices. “Mixed cues from the global peers did not cause any serious disturbance in the mood of the domestic market as FII inflows stayed put with the prospects of the Indian economy”.

He added that the Bull Run was, however, lately interrupted by weak guidance from Infosys, which cast a shadow over the outlook of the Indian IT sector. The banking sector led the sectoral rally in anticipation of a good Q1 result. The picture of global markets was mixed as the US market struggled with weak earnings. “In the upcoming week, investors will be closely focused on the FOMC meeting. While a 25-basis point rate hike is widely expected, investors will be more interested in the committee's commentary on future rate actions, seeking clues for the anticipated future rate pause”, Nair said.

The BSE Sensex surged 623 points, or 0.9 per cent, at 66,684.3 during the week ended July 21, while the Nifty gained 181 points, or 0.9 per cent, to 19,745. As many as 26 stocks in the Nifty 50 index delivered a positive return for investors in the week. With a gain of 5.5 per cent, Kotak Mahindra Bank emerged as the top gainer in the index. It was followed by State Bank of India (5.2 per cent), Larsen & Toubro (4.6 per cent), NTPC (4.1 per cent), and Dr. Reddy's Laboratories (3.9 per cent). ICICI Bank, ITC, and Grasim Industries also advanced by over three per cent. On the other hand, Reliance Industries, Infosys, and Shree Cement declined 7.4 per cent, 6.7 per cent, and 5.1 per cent, respectively.

Sector-wise, the BSE Bankex index surged the most (3.1 per cent) during the week gone by. While BSE Capital Goods and BSE Healthcare indices have registered a weekly gain of 2.6 per cent, and 1.8 per cent, respectively. On the other hand, the BSE Information Technology index has registered a weekly decline of 3.8 per cent.

Technical Outlook

Nifty: Rajesh Bhosale, Technical Analyst at Angel One Ltd said “Despite the impressive weekly winning streak for the fourth consecutive week, profit booking in key heavyweights on Friday slowed down the bull run.” The market's recent multi-month breakout around the 19000 level indicates a significant bull run. However, due to the recent vertical move and overbought conditions, the next upward movement may not be as swift as the recent run. It is anticipated that there may be a correction, either in terms of time or price, so the ideal strategy would be to buy on dips and book profits at higher levels.

Bhosale added, “The psychological mark of 20000 that was just missed during the week remains an immediate hurdle, followed by the golden retracement target of 20100 – 20200. On the downside, the recent congestion breakout level of 19600 – 19500 is considered immediate support, and a more significant correction may occur only if this level is breached”. Traders should closely monitor these levels and consider playing within this range.

Bank Nifty: Kunal Shah, Senior Technical & Derivative analyst at LKP Securities said the BANKNIFTY, experienced a volatile trading session with both buying and selling pressure seen from market participants on both ends. This volatility indicates indecision in the market, and traders are closely monitoring the price movements. “The options data suggests that the index may remain range-bound as there is significant option selling observed at the at-the-money (ATM) strikes. Option sellers often anticipate that the market will remain within a specific range during a certain period. The lower-end support for BANKNIFTY is placed at 45900”.

He added, If the index falls towards this level and holds, it may act as a support, preventing further downside. On the other hand, the upside resistance is visible at the 46350-46400 levels. If the index manages to surpass this resistance area, it could signal further upward movement, Shah said.