Markets trim gains, broader markets outperform; Only buyers seen in Ruchi Soya Industries, Jet Airways, Tips Industries & many more

Indian markets commenced the week on a prosperous note with Nifty recording a fresh all-time high of 15,915.65, surpassing its previous all-time high of 15,901.60, which was touched in mid-June this year. 

Market Update at 9:52 AM: Indian markets commenced the week on a prosperous note with Nifty recording a fresh all-time high of 15,915.65, surpassing its previous all-time high of 15,901.60, which was touched in mid-June this year. 

However, once again, profit booking emerged at all-time highs, and markets trimmed their morning gains and slipped below the neutral line. The advance-decline for Nifty 50 is even-steven as 25 stocks were in the red while the other 25 in green. Overall, the market breadth is still in favour of advances, courtesy of the broader markets as they are seen outperforming the frontline gauges.   

Among the sectoral indices, Nifty PSU Bank is leading from the front as it jumped over 1.5 per cent, followed by Nifty Pharma, which has added 0.78 per cent. On the flip side, Nifty IT and Nifty Media were in the red.  

Last week was a dramatic one due to several developments that took place throughout the week such as Fed Chairman Jerome Powell’s testimony, Reliance AGM, Centre raising an alert on Delta plus variant, and Moody’s Investors Services slashing India’s growth projection to 9.6 per cent for the calendar year 2021 from its earlier estimate of 13.9 per cent. Moreover, the monthly expiry of derivative contracts kept the market participants on the edge of their seats.   

The market has taken negative news flow in its stride and recorded gains of 1.13 per cent. Nifty even made an attempt to test its all-time high of 15,901; however, it fell short by a whisker. Nevertheless, it has recorded its highest closing on a weekly basis.   

Among the sectoral indices, Nifty PSU Bank jumped 5.37 per cent, followed by Nifty Metal and Nifty IT. Interestingly, India VIX cooled off by yet another 9.6 per cent. As a result, it slipped below the 13.5 mark.   

Technically, Nifty has moved in a range of roughly 450 points between 15,450-15,900 levels over the last 10 trading sessions. The index is finding it too difficult to cross their all-time highs while on the other hand, the zone of 15,450-15,500 is acting as a strong support zone. Despite moving in a band of 450 points, last week was quite unique for the index as in each of the trading sessions, Nifty opened with a gap-up or a positive bias.   

The index on Wednesday tested its 20-DMA and interestingly, it has not managed to close below the 20-DMA since May 5, though it slipped below its 20-DMA on an intraday basis, but not closed below that. Hence, the 20-DMA is a crucial support to watch out for in the near term.  

In the last trading session of the week, the key takeaway point was Bank Nifty, which was seen to be out of touch during June Series. It inaugurated the new series on a buoyant note and was seen relatively outperforming Nifty index on a weekly as well as on a daily basis. The 20-DMA, which was acting as stiff resistance for Bank Nifty, has now reclaimed its 20-DMA and recorded its highest closing since June 08. Moreover, on Friday, there was no sizeable open interest (OI) addition seen on the Call side of Bank Nifty while on the flip side, aggressive Put writing was seen in the 35,000 strikes for the coming weekly expiry.   

Going ahead, if we witness a follow-through buying on Bank Nifty, it will act as a confirmation of breakout on Bank Nifty.  

In the coming week, the key events to watch out for are the auto sales and Markit Manufacturing PMI. Besides, the progress of the monsoon will also remain on their radar.  

Hence, all these factors along with the movement of crude oil are likely to influence the movement of the markets in the near term.