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Indian stock markets managed to claw back losses on Friday, led by gains in financial stocks. Government export duties on oil products had triggered a plunge in energy majors Reliance Industries and ONGC. The NSE Nifty 50 index on Friday ended 0.18% lower at 15,752 while BSE Sensex slipped to 52,907 but managed to close the week marginally.

Global Market Cues

On Friday, stocks made a strong intraday recovery to finish higher but the rebound was not enough to erase their losses for the week. The S&P 500 rose 1.1%, snapping a four-day losing streak for the benchmark index, which still posted its fourth losing week in the last five. The Dow Jones Industrial Average rose 1%, while the tech-heavy Nasdaq gained 0.9%. 

SGX Nifty outlook

SGX Nifty today is down by over 20 points and it is trading around 15,720 levels. 

"Immediate support placed for SGX Nifty is at 15,520 whereas major support for SGX Nifty is placed at 15,340 mark. On the upper side, immediate hurdle placed for SGX Nifty is 15,980 while strong resistance for SGX Nifty today is 16,150 mark," said Anuj Gupta, Vice President — Research at IIFL Securities. The IIFL Securities expert said that SGX Nifty is expected to remain sideways today.

Asian markets' early trends

In early morning deals, Asian stocks are trading flat. Japanese Nikkei is up around 0.59 per cent at 26,089, Hang Seng is down 0.80 per cent at 21,452, China's Shanghai is up by 0.30 per cent at 14938 whereas South Korean KSPI is down 0.32 per cent at 2,284 levels.

Key factors to watch this week

Global trends, crude oil movement, rupee's performance and FII activity may keep Nifty volatile this week ahead of the start of the quarterly earnings season, say analysts. IT major TCS would announce its quarterly numbers on July 8, kicking off the earnings season. 

There is selling exhaustion at lower levels as market is bouncing back from every intra-day dip amid headwinds like fall in global markets, rupee weakness, and windfall tax on domestic refineries.

On the global front, US jobs numbers and the minutes of Federal Open Market Committee (FOMC) last meeting will also be closely watched. 

Sectors in Focus

“Among the sectors, we expect auto and FMCG to continue the prevailing momentum while other sectors may selective pitch in as well. Participants should maintain their focus on identifying stock-specific opportunities but keep a check on leveraged trades," said Ajit Mishra, VP - Research, Religare Broking.

FII Activity

On Friday, FIIs sold Indian equities worth 2,324 crore on a net basis while DIIs bought worth 1,310 crore. So far in 2022, FIIs have sold Indian equities worth more than 2 lakh crore, weighing both on Indian markets and rupee. 

“FIIs are still selling but the momentum has come down significantly. Therefore, bulls will look for a relief rally if global markets remain stable," said Santosh Meena, Head of Research, Swastika Investmart Ltd.

Nifty Technical Outlook

“Technically, Nifty is respecting the 15700-15500 zone beautifully. However, 20-DMA is acting as a strong hurdle in the upside which is currently placed at 15827 level; above this, we can expect a short-covering rally towards 16050/16200 levels. The bulls will have the upper hand till the Nifty trades above the 15500 level while below 15500, the weakness may again resume towards 15350/15180 levels," Mr Meena said. 

Ajit Mishra, VP - Research, Religare Broking Ltd, said: “The recent consolidation in the index indicates caution among the participants and the Nifty needs a decisive break above 15,900 levels to extend the rebound towards the 16,200 zone else the sideways to negative bias will continue. On the downside, the 15,100-15,350 zone would act as a support."

Nifty Bank Technical Outlook

On Friday, the banking sector index closed 0.35% higher at 33,539. “Bank Nifty is respecting 33000 level. However 20-DMA is acting as a strong hurdle which is currently placed at 33700 level; above this, we can expect a short-covering rally towards 34150/34500 levels while if it slips below 33000 level then 32500 is the next critical support level," said Santosh Meena of Swastika Investmart Ltd.

Derivatives Data

“If we talk about the derivative data then the long exposure of FIIs in the index future stands at 16% and the put-call ratio is sitting at 1.14 level therefore there is good scope for a short-covering rally," Meena said. 

On stocks front, “we witnessed long rollovers in M&M, ITC, Hero MotoCorp, Ashok Leyland, BEL, Eicher Motors, MCX, Siemens, Cummins India etc. While stocks like Kotak Bank, Deepak Nitrite, Biocon, PEL etc. had short rollovers," Kotak Securities said on June rollover data. 

US bond yield

“US 10 years bond yield is up by 0.25 per cent at 119.56 whereas US 30 years bond yield is up by 0.27 per cent at 139.72," said Anuj Gupta.  He said that US bond yield is in positive territory and it may continue to attract investors ahead of the US Fed meeting scheduled this week.

Outlook for crude oil price

"Oil price today fell in early morning Asian trade on fears of global recession and lower OPED output. In global commodity markets, crude oil is in the broader range of $107.70 per barrel to $113 per barrel and overall trend for crude oil is negative," said Anuj Gupta.

 

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