Broader market in consolidation mode

Indian markets extended gains in the week ended June 28 with benchmark indices hitting life-time highs primarily led by sharp buying from FIIs, steady progress of monsoon, RBI Governor confidence about 7.2 per cent growth in the current financial year and potential rate cuts in the near future by US Fed. BSE Sensex gained 1,822.83 points or 2.36 per cent to finish at 79,032.73, while NSE Nifty added 509.5 points or 2.16 per cent to end at 24,010.60 points. The Sensex and the Nifty touched record high of 79,671.58 points and 24,174 points, respectively during the week ended. It is pertinent to observe that in the month of June 2024, both the benchmark indices surged 6.5 percent each. While the action was concentrated in large-caps, the broader market was in consolidation mode. BSE Mid-cap Index rose 0.4 per cent and the BSE Small-cap index gained 0.4 per cent. Market participants will be keeping an eye on the trajectory of the monsoons, Q1 results season, first flush of IT majors’ earnings and pre-Budget expectations. In the medium term, all eyes will be on the Union Budget proposals which will dictate the market. Political uncertainty after the US Presidential Debate may keep US markets subdued in near term.

F&O / SECTOR WATCH

Maintaining the momentum in cash market, in the derivatives segment, the Nifty futures (July) rallied 2.2 per cent to close at 24,132. Bank Nifty futures closed at 52,530 with 1.5 per cent gain. The cumulative Open Interest (OI) increased to 156 lakh contracts.

A price rise accompanied by increase in OI indicates long build-up. In the option segment, the highest Call writing was seen at the 24,500 and 24,200 strikes, while put writers were most active at the 24,000 and 23,800 strikes. The positioning of traders in weekly and monthly option contracts give a contrasting signal. The PCR of the weekly options is at 0.6, whereas the same of monthly options is at 1.3. So, the bias for this week is bearish, whereas that for the broader trend is positive.

For Bank Nifty, the highest Call Open Interest was seen at the 53,000 and 53,500 strikes, whereas on the Put side, it was concentrated at the 52,000 and 51,500 strikes. Implied Volatility (IV) for Nifty’s Call options settled at 13.09 per cent, while Put options concluded at 14.01 per cent.

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