Mixed signals for Indian mkts this week

Amidst heightened volatility in the backdrop of US Fed and the ECB resorting to rate hikes, better progress of monsoon, moderation in FII buying and mixed Q1 results from major corporates; the domestic stock markets took a breather after rallying for four weeks and touching record highs.

BSE Sensex lost 0.78 per cent or 524.06 points to end at 66,160.20 points, and NSE Nifty shed 0.50 per cent or 99 points to close at 19,646 points. However, broader markets continued to attract interest of both investors and speculators. The BSE Mid-cap Index gained two per cent and the BSE Small-cap index added one per cent during the week. FIIs sold equities worth Rs3,074.71 crore, while DIIs bought equities worth Rs5,233.79 crore.

The Government will release GST collections for July on August 1. The manufacturing PMI data will be released by S&P for major countries, including India and the Services PMI data will also be released in the week ahead. The week ahead will witness a slew of companies releasing quarterly earnings. Maruti Suzuki, Power Grid Corporation of India, Adani Transmission, Adani Green Energy, Titan, Bharti Airtel, Adani Enterprises, Sun Pharma, InterGlobe Aviation, Ambuja Cements, Gail (India), Bosch, UPL, HPCL, Dabur India, Eicher Motors, Zomato, SBI, M&M, Britannia and BHEL. Going forward, market will continue to take direction from both global as well as domestic factors.

Weaker demand could weigh on company earnings. Warnings of erratic monsoons, which can impact India’s largely agriculture-based economy are a bother. Nothing is cheap right now, so investors have to be very, very selective on midcaps and small-caps.

F&O / SECTOR WATCH

After a bout of profit during the last week of last settlement, the August series began with a lacklustre to negative start in the market. Rollovers in Nifty futures improved at 84 per cent (last month 76%), well above the last 3-month average of 71 per cent. This month’s rollover is the highest observed in the last three months. It is pertinent to observe that the Nifty closed with series gain of 3.5 per cent and in last 4 months 15 per cent. On the flip side, the rollover in Bank Nifty remains unchanged, suggesting a consistent momentum compared to the previous month. For Nifty, the highest call open interest concentration is at 19,800 points, while for put options, it stands at 19,600 strike. As for Bank Nifty, the call and put open interest concentration is at 45,500 points. The Implied Volatility (IV) of Calls closed at 10.59 per cent, while for Put options, it closed at 11.29 per cent. The Nifty VIX for the week concluded at 10.51 per cent. Additionally, the PCR OI for the week ended at 1.36.

Stock futures looking good are DLF, Dabur, Federal Bank, LIC Hsg, Granules and National Aluminum. Stock futures looking weak are GNFC, Ramco Cements and UPL.