Correction likely in upward bias trading

Ignoring hints of a possible rate hike by the US Federal Reserve in its next policy meeting and buoyed by positive economic data, healthy provisional numbers by corporates ahead of the June quarter earnings and consistent buying by FIIs; market continued to rally for yet another week and benchmark indices posted record highs. The CPI number for June, scheduled on July 12, is expected to remain largely flat compared to 4.25 percent recorded in May. Renewed weakness in rupee is becoming a concern. New demat account additions zoomed to a 13-month high in June, with investors looking to participate in the market rally amid the new highs. A surge in demat account openings during market rallies is a common occurrence, but also indicator of start of a “bubble”. The sharp 15 per cent rise in the Nifty from the March lows, coupled with news and stories surrounding the consequent wealth creation, is attracting new investors. New investors normally chase low-grade small-caps, which slowly run into the bubble territory. There are signs of this happening now. Seasoned investors should take this as a sign of caution. Electronics manufacturing services and solutions provider Cyient DLM will be making its debut on the bourses on July 10, while Kolkata-based Senco Gold will also be listing in later part of the next week, on July 14.The listing of Alphalogic Industries, Synoptics Technologies, Tridhya Tech, and Global Pet Industries will also take place in coming week. The momentum in the market may sustain despite possible intermittent consolidation and correction in the coming week, with focus on the macroeconomic data. Stock-specific actions are indicated as the corporate earnings season begins next week.

F&O/ SECTOR WATCH

Ahead of the start of Q1 earnings season, derivative segment witnessed sharp stock specific moves. The corporate earnings season for the quarter ending June FY24 will be kicked off by the IT majors next week. Tata Consultancy Services and HCL Technologies will be the first to announce their numbers on July 12, followed by Wipro on July 13. In the option segment, the maximum weekly Call open interest is at 19,400 strike, followed 20,000 and 19,900 strikes. Maximum Put open interest was seen at 19,400 strike, followed by the 19,300 and 19,000 strikes.The maximum pain is at 19,400 strike where there is maximum Call and Put open interest.

The implied volatility (IV) for call options concluded at 10.38 per cent, while put options closed at 11.29 per cent. Stock futures looking good are BOB, Granules, JSPL, TechMahindra, Oberoi Realty, IOC and PNB. Stock futures looking weak are Atul, Aarti Inds, Bandhan Bank, IRCTC, IndiaMart, Marico and UPL.