Another winning week in sight

Ahead of the Union Budget, markets remained optimistic about strong government support for the economy, especially for the manufacturing sector, in the upcoming Union Budget, expectations over the Q1/FY25 earnings season, good spread of Monsoon, FII lows and global cues.

Equity indices extended the winning streak for the fifth consecutive week; with benchmark indices crossing major milestones in the first week of July. On July 5, BSE Sensex and NSE Nifty touched record highs of 80,392.64 points and 24,401 points, respectively. The Sensex rose 963.87 points or 1.21 per cent toclose at 79,996.60, while the Nifty index gained 313.2 points or 1.30 per centto close at 24,323.80. BSE Mid-cap Index and the Small-cap index gainednearly 3 percent and 4 per cent respectively showcasing outperformance of broader markets. Outperforming sectors during the week ended were the Information Technology, Pharma, Media and Oil & Gas sectors.

In the near term, equity markets will take cues from major domestic and global economic data such as India’s CPI, IIP, statements from US Fed Chief, US core CPI inflation and initial jobless claims, the first quarter earnings from IT majors TCS and HCL Technologies, developmentof monsoon season, international crude oil prices, and other global cues.

Oil prices remain critical for markets with their impact on inflation and on therate trajectory of global central banks including India’s. On the back of Q1/FY25 earnings season, expect stock and sector-specific action in the week ahead.

IPO Corner

During the first half, around 35 companies from diverse sectors such as co-working space, furniture retailing and online ticket booking have been able to tap the market raising almost Rs32,000 crore. A stronger H2 CY25 for the IPO market is anticipated.

F&O/ SECTOR WATCH

Continuous sector rotation has played a crucial role in sustaining and driving the market higher. Sectors such as IT, Pharma, Railways, Defence, private banks, and oil & gas have all contributed to this upward momentum. Nifty reached a record high and closed with a weekly gain of over one per cent, while the Bank Nifty rose by more than 0.5 per cent. In the option segment, highest concentration of Call Open Interest is at the 24,400 strike, followed by the 24,500 strike. Significant Open Interest on the Put side is observed at the 24,300 strike, followed by the 24,200 strike.

The highest Put Open Interest was observed at the 24,000 and 24,200 strikes. For the Bank Nifty, the highest Call Open Interest was observed at the 53,000 and 54,000 strikes, while on the Put side, the highest Open Interest was at the 52,500 and 52,000 strikes. While Implied Volatility (IV) for Nifty’s Call options settled at 12.69 per cent, while Put options concluded at 13.07 per cent. Stock futures looking good are Apollo Hospitals, Aarti Inds, Deepak Nitrate, MGL, Powergrid, Sun Pharma and ONGC.

STOCK PICKS FOR 2024

Shilpa Medicare Ltd is an integrated pharmaceutical group withbusiness interests in niche Oncology & Non-oncology APIs, Peptides,Polymers, etc. The company is progressing up the valuechain through the formulation business, specialising in complex oncology and non-oncology treatments on a global scale. Buy on declines for targetprice of Rs1,000.

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