Markets keenly tracking S-W monsoon progress

Weighed down by the hawkish commentary from Federal Reserve Chairman Jerome Powell, stating more rake hikes lying ahead, surprise rate hike by the Bank of England, sluggish progress of monsoon, bout of Vertigo at historic highs and aggressive profit booking by some market players; the domestic markets snapped four weeks of gaining momentum during the week ended. BSE Sensex fell 0.63 per cent or 405.21 points to finish at 62,979.37pts, and NSE Nifty shed 0.85 percent or 160.5 points to end at 18,665.50pts. In the broader market, BSE Mid-cap Index declined 1.2 percent and BSE Small-cap index shed one percent. After alternate bouts of buying and selling, FIIs’ net buying was only Rs1.5 crore in the passing week, but on the monthly basis, they continued buying for fourth straight month, pouring in nearly Rs7,000 crore. Sectors attracting FII attention are financials, autos and capital goods. Continued selling from FIIs was seen in IT and metals.

Market watchers are closely tracking the South-West monsoon progress as it is critical for the RBI’s inflation outlook and also for the Indian economy. The India is expected to get normal rainfall during the southwest monsoon season despite the evolving El Nino conditions according to reports of the IMD. The IPO market is gathering steam again, with three main board IPOs and four from SME segment set to open in the coming week. The seven issues are expected to raise a total of over Rs1,600 crore. The SME issues are slated to mop up Rs110 crore. The three main board IPO’s are drone manufacturing company IdeaForge Technology, Cyient DLM - the subsidiary of IT services firm Cyient and construction and development company PKH Ventures. In the SME segment, conveyor belt manufacturer Pentagon Rubber, PET stretch blow moulding machine manufacturer and exporter Global Pet Industries, software development services and solutions providers Tridhya Tech and Synoptics Technologies are approaching the markets. The market will remain shut on June 28 for Bakri Id.

F&O/ SECTOR WATCH

Ahead of the settlement week, derivatives segment witnessed significant volatility. Nifty and Bank Nifty closed below the psychological levels of 18,700 and 44,000.

The Nifty now has an immediate support at 20DEMA trading near 18,641pts, if breached can slip to 18,400 level. The maximum Call Open Interest (OI) was is at 18,800 strike, followed by 19,000 strike and 18,900 strike. The maximum Put OI is at 18,000 strike, followed by 18,800 and 18,700 strikes. Option data indicated that 18,800-18,500 is expected to be remain crucial zone for the Nifty in coming sessions. Bank Nifty faces resistance at the 44,000 level, where the highest OI is built up on the Call side. On the other hand, support is observed at the 43,500PE level, where Put writers are active. The Implied Volatility (IV) for Call options concluded at 10.89 per cent, while Put options closed at 11.79 per cent. The Nifty VIX, which measures market volatility, ended the week at 11.55 per cent.

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