June quarter earnings to set market tone

The Sensex closed 884 points higher at 36,542 and the Nifty ended 246 points higher at 11,019.

Buoyed by the drop in global crude oil prices, healthy start to earnings season, good progress of monsoon and positive global cues, markets logged impressive gains during the week ended.

The Sensex closed 884 points higher at 36,542 and the Nifty ended 246 points higher at 11,019. It is pertinent to note that the Sensex hit an all-time high, while Nifty and Bank Nifty both came close to their respective all-time peaks.

However, the broader markets underperformed the benchmark indices, with the mid-cap index gaining just 0.3 per cent and the small-cap index gaining only 0.85 percent during the week.

FIIs remained sellers in the cash segment but were seen hedging their positions by remaining buyers in the derivatives segment; while the DIIs did concentrated buying in index heavyweights.

IIP growth dipped to 3.2 per cent in the month of May compared to 4.8 percent growth recorded in prior month mainly due sluggish performance of manufacturing and power sectors coupled with poor off take of FMCG.

Consumer inflation increased to 5 per cent in June 2018 (lower than expected) compared with 4.87 per cent in May 2018. With a lot of big corporate earnings scheduled to be announced, expect stock specific action in an action packed week.

The near-term trend will be dictated by June quarter earnings, progress of monsoon, domestic macro economic data, FII and DII activity, the movement of rupee, crude oil price movement and global cues. Emerging-market stocks and currencies rebounded this week as trade tensions eased in the absence of retaliation plans from China after US President Donald Trump’s latest escalation.

For the week ahead, chartists predict trading range of 36,000-37,000 and 10,875-11,150 for the benchmark indices. Support for the indices evident at 36,250 & 36,000 and 10,950 & 10,875.

The underlying trend of Nifty is showing tiredness of bulls at the highs and selling pressure likely from near the highs or all-time highs of 11,170-200 levels. The immediate support is now placed at 10,900-850 levels for the next 1-2 weeks.

( Source : Deccan Chronicle. )
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