Markets may consolidate at higher levels this week

Ahead of the Union Budget and Q1 earnings season, benchmark indices posted minor gains, marking their third consecutive week of growth during the week ended. BSE Sensex added 217.13 points or 0.28 percent to end at 77,209.90 points, while NSE Nifty rose 35.5 points or 0.15 per cent to close at 23,501.10 points. On June 19, BSE Sensex touched fresh record high of 77,851.63 points, while NSE Nifty hit record high of 23,667.10 points on June 21. Nifty Bank index, in particular, stood out with its largest weekly gain of 2024, surging by more than three per cent. This impressive performance also signifies the Nifty Bank’s longest winning streak in 19 months, as it recorded gains for the sixth straight week. Exuberance in Small-Cap stocks saw the Small-cap index rise 1.5 percent. The share of mid- and small-cap stocks in the country’s total market capitalization was 36 per cent last month compared to 25 per cent in December 2020 and 20 per cent in December 2013. However, profit booking emerged on concerns about the slow progress of the monsoon and heatwaves in northern India. With a coalition government in place, there is optimism that the upcoming Union Budget will strike a balance between growth initiatives and populist measures. Additionally, expectations are high for government actions aimed at stimulating consumption. The market is likely to remain steady and consolidate at higher levels in the near term.

Budget-related sectors are likely to remain in action on the back of news flow and expectation growth focus policy.

In the US markets, the rise and fall in shares of Nvidia, whose chips power AI technology, has helped drive the direction of the major indexes this year. Despite US Fed officials indicating that they are in no hurry to lower rates, even after an inflation report for May suggested cooling price pressures; AI enthusiasm is winning over higher rates and propelling markets.

F&O/ SECTOR WATCH

Amidst highly volatile intraday sessions, the derivatives segment witnessed robust trading volumes. In the option segment, highest Call Open Interest concentration was seen at 24,000 strike and highest Put Open Interest concentration was seen at 23,500 strike. In the near term, the Nifty has a major support now in the zone of 23,200-23,000.

(The author is a senior maket analyst and former vice- chairman, Andhra Pradesh State Planning Board)