Markets for the Week : 25th to 29th July

 WELCOME TO THE WEEKLY BLOG ON INDIAN EQUITIES MARKETS

Important Weekly Closes:

PARTICULARS	WEEKLY CLOSE	% CHANGE
Sensex	56072.23	+4.30%
Nifty50	16719.45	+4.18%
Bank Nifty	36738.95	+5.93%
Gold	50644.00	+1.07%
Silver	55131.00	-0.82%
Crude Oil	94.70 Usd/Bl	-2.96%
USDINR	79.85	+0.20%

• As mentioned in the previous weekly blog 16200 was a very important resistance for Nifty, the Nifty broke the resistance zone and closed at its highest point for the week at 16719.45, up by +670.25 points for the week.

• Also, it was stated that Bank Nifty was positive, which was one of the topmost gainers for the week with a rally of +2056 points.

• At the beginning of July 2022, it was observed that Nifty IT had taken an important support and was holding on to the same throughout the first 15 days of July. Nifty IT was the topmost gainer in the sectorial indices with an increase of +6.36% for the week.

Brief of some important results declared during the course of the Week:

Notes:

1. Many stocks even after declaring flat / negative results have risen during the course of this week on account of a already sharp drawdown in their prices (meaning results were already factored in).

2. India’s largest company by Market Capitalisation RELIANCE INDUSTRIES declared its results on Friday which saw an exponential growth on both QoQ and YoY basis, however they were below street estimates and the company has also forecasted impact of recession on its core business due to Inflation.

SECTOR SPECIFIC OUTLOOK

Nifty Auto - "Positive"

• This sector continues to outperform all the sectoral indices on account of fall in base metal prices, improvement in supply chain and availability of semi-conductors, rise in demand, new-product launches across segments, Capex plans by companies and EV plans. The sector remains buy on DIPS.

Stocks on Focus for accumulation : Tata Motors, Maruti (Above Rs.9000/-), Hero-Motors and Eicher Motors.

Nifty Bank - "Positive"

• The Banking stocks have declared stable results on sequential basis.
• ICICI Bank and KOTAK Bank have declared strong results for the Q1 of FY22-23. 
• Bank Nifty is up by +3300 points / +10% approximately for this month, it highest ever increase in last 12 months. 

The Sector now faces a strong resistance, however sustaining above 37300 on the Bank Nifty index, will take the Sector to new highs.

Stocks on Focus for accumulation : Axis Bank and HDFC Bank (with stop-loss of 1280).

Nifty FMCG - "Positive"

• The fall in crude palm-oil prices have been extremely favorable for the sector. The prices of Palm-oil have corrected by -25% approx. for the current month.
• Technically this sector has given a strong breakout and is at its all time high.

Stocks on Focus for accumulation : ITC.

NIFTY IT - "Neutral"

• Even though this sector has taken a strong support and has shown it first signs of reversal, however on account of higher employee attrition rates, increasing fixed costs, margin pressures, premium valuations and growth woes in the western countries (major revenue contributors for the IT companies) the sector remains more stock specific.
• Expect volatility to continue in this sector.

Stocks on focus for Buy-on-Dips : Mindtree, LTTS, Wipro (Stop loss at 388) and Tech Mahindra (Stop Loss at 930).

NIFTY OIL & GAS - "Negative"

• Elevated Crude Oil Prices (sustenance above 90 USD/Barrel continue to maintain pressure on the OMC's : BPCL and HPCL.
• The Refining Margins have seen its highest ever dip by -60% in the current month which is extremely negative for standalone refineries as MRPL, Chennai-Petro & Reliance (to some extent). 
• Natural Gas futures have seen an increase of +48% approx. for the month which continues to maintain pressure on GAS companies : MGL, IGL and GAIL.

With regards to the WINDFALL TAXES : During the course of the week the government withdrew the recently levied windfall taxes on exports of Gasoline and also slashed the rates for other fuel products which in brought a rally in Reliance Industries and Vedanta (the top 2 beneficiaries from its announcement). The Government has committed to review these taxes on fortnightly basis.

FUTURE OUTLOOK:

1. The Indian Markets traded strong despite broader mixed sentiments in the Asian Markets and high volatility in the US Markets.
2. NIFTY50 has a strong resistance at 16800 - 16850 levels only above which shall we witness a stronger rally. 15300 now remains a strong support for Nifty50 on long term basis and 16300 is a short term support on Weekly basis.
3. NIFTY BANK is at a strong resistance, Expect fresh rally only above 37300. 32300 now remains a strong support for Bank Nifty on long term basis and a short term support of 35700 on weekly basis.
   
4. INDIA VIX is substantially low, any major Domestic / Global Event will bring a sharp increase in the same, causing volatility on the downside.
5. President PUTIN has indicated at reduced Gas supplies. This would make situation more adverse for European Countries, bringing in more volatility from the global markets.
6. Sustenance of Crude Oil above 90 USD/Barrel and USD/INR at elevated levels will continue to maintain pressure on the Economy.

Important Note

More than any Quantitative / Technical / Fundamental Data the markets are more sentiment / psychology driven. Too much of negativity will bring strong upward reversals on the markets (as witnessed in July 2022), excessive upbeat will bring sharp drawdowns / consolidations (as witnessed from February to June 2022).

Accordingly highly oversold stocks have seen a sharp reversal in July 2022 : Cement Stocks, IT Stocks and FMCG stocks.

The markets have become highly dynamic globally where Raw Material Prices (for all industries), Macro Events and Economic Data are now being tracked on daily basis by all investor-classes and a Fall/Rise on them brings an immediate reaction to the stock prices.  

DISCLAIMER : THE ABOVE VIEWS ARE EXPRESSED ON BASIS OF BROAD MARKET NEWS. THERE ARE NO SPECIFIC RECOMMENDATIONS TO BUY SELL OR HOLD. KINDLY CONSULT YOUR FINANCIAL ADVISOR BEFORE INVESTING INTO STOCK MARKETS. INVESTMENT INTO EQUITY MARKETS ARE SUBJECT TO RISKS