SGX Nifty indicates that bulls may begin week on buoyant note as its up by 118 points at 15,892

Nifty ended the month of July with a minuscule gain of 0.3 per cent, while Bank Nifty underperformed the frontline gauge as it ended July with a loss of 0.5 per cent. If you are a trend trader, who traded in Nifty or in Bank Nifty, the month of July would have not been very fruitful as there was no decisive trend witnessed in these indices. However, the real action was seen in the broader markets with Nifty Midcap 100 advancing 3.1 per cent in the month of July if this is not enough to make you say wow! The performance displayed by Nifty Smallcap 100 would definitely stun you as it skyrocketed 8.1 per cent in the month of July.   

Nifty index is stuck in a range and now, this range-bound phase has been extended to 33 trading sessions. If you recall the period between March and May, we had witnessed a broad consolidation. Timewise, March to May consolidation had a length of 66 trading sessions while the current consolidation’s length is almost half of the earlier consolidation i.e., 33 trading sessions.   

The current consolidation, pricewise, has a depth of nearly 3.3 per cent while March to May consolidation had a depth of nearly 8.30 per cent. Interestingly, pricewise, the upmove witnessed after breaking out of March-May broad range is almost in symmetry with the depth of the current phase of consolidation and timewise since it has already witnessed half of the length of March-May consolidation. We can assume that this consolidation is at a maturing stage. So, a move above the level of 15,900-15,970 could result in the breakout of this range.    

An interesting statistic that we would like to share for the month of July is that in Nifty 500 index, nearly 130 stocks have managed to close below their prior par low i.e., June month low. While 85 stocks have formed an inside bar, only nine stocks, which translates to 2 per cent stocks of Nifty 500, have managed to close above June month’s high. So, what does this statistic suggests? Beneath the surface, the markets have already witnessed a decent correction, though it is not being reflected in the headline indices price.   

Another important takeaway from the month of July is that the FIIs have been net sellers in the cash market from the month of July to the tune of over Rs 20,000 crore and despite a significant selling from them, there was not much harm done to the headline indices as this selling were well absorbed by DIIs as they were net buyers to the tune of Rs 18,393.92 crore.  

Besides, auto stocks would remain in limelight on Monday as over the weekend, auto companies released their sales data for the month of July. Furthermore, the GST revenue collected in July 2021 stood at Rs 1,16,393. This is likely to act as music to the bulls’ ears.