Macro data to set the tone for markets

Buoyed by the strong progress of the South-West monsoon, narrowing current account deficit (CAD) in Q4FY23, HDFC-HDFC Bank merger update, robust FII inflows and positive global data; the benchmark indices finished at a record closing highs during the last week. BSE Sensex rallied 1,739 points or 2.8 per cent to 64,719, and the Nifty jumped 524 points or 2.8 per cent to 19,189 during the week, taking monthly gains to around 3.5 percent. After the failed strategy of Sell India, Buy China, amid the re-opening of the Chinese economy after Covid in the first two months of 2023; FPIs have reversed their strategy to ‘Buy India, Sell China’. GST collections for the month of June rose 12 percent year-on-year to over Rs1.61 lakh crore. The revenues had touched a record high of Rs1.87 lakh crore in April. July 3 (Monday) will be the first day when the Nifty offshore derivatives will start trading on the NSE International Exchange under the new name GIFT Nifty, following its transition from Singapore Exchange.

Market will continue to see action in the IPO market in the coming week too, as two IPOs- one each in the mainboard and SME segments - will be opening for subscription next week. In the SME segment, the listing of Veefin Solutions is on July 5, and Essen Speciality Films, Greenchef Appliances, and Magson Retail and Distribution is on July 6. Near-term trend will be dictated by the monsoon progress, Q1 results, macroeconomic data, US Fed minutes and other global cues. Ahead of Q1 results, adopt stock specific strategy advise old timers.

F&O/ SECTOR WATCH

Mirroring the strong bullish undertone, the settlement week witnessed good rollovers @77 per cent (well above the three month average of 70%). With an eye on Q1 results, it is pertinent to observe that index futures positions have declined indicating preference for stock-specific approach. Sectors that can outperform in the July series with focus on stocks with long rollovers are - Auto, Banking, Finance, Capital Goods, FMCG, Realty and Pharma.

In Bank Nifty, the Call and Put OI concentration is at 44,500, which points towards further consolidation in the index. For upcoming week expect markets to remain buoyant and any dip should be used to create fresh longs.

Stock futures looking good are Ashok Leyland, Axis Bank, Bharat Forge, BEL, IPCA Labs, RIL and Sun Pharma. Stock futures looking weak are Adani Enterprises, Adani Ports, Gujarat Gas, NMDC, Petronet and PVR Inox.