D-street ended at record highs amid positive macros and FIIs support; What lies ahead?

Indian equity benchmarks ended the week in green with Sensex and Nifty settling at record closing high levels amid optimism about the strength of India's economic growth outlook and healthy macroeconomic numbers.

The government data showed Retail inflation continued its downward slide to reach a one-year low of 4.75 per cent in May due to a marginal decline of prices in the food basket and remained within the Reserve Bank’s comfort zone of below 6 per cent. Besides FIIs also turned buyer this week along with the DIIs which has supported the market at the new highs.

The BSE Sensex surged 299 points, or 0.39 percent, to 76,993 during the week ended on June 14. The Nifty gained 175 points, or 0.75 percent, to 23,466. Sector-wise, the BSE Capital Goods index was top performer with a gain of 6.4 percent, followed by BSE Realty index (gain of 5.5 percent) and BSE Oil & Gas (increase of 3.5 percent). On the other hand, the BSE Information Technology index declined by 1.1 percent during the week.  

As many as 36 stocks in the Nifty 50 index delivered positive returns for investors last week. With a weekly gain of 7.4 percent, Ultratech Cement emerged as the top gainer in the index. It was followed by HDFC Life Insurance Company (up 6.3 percent), ONGC (5.7 percent) and Shree Cement (5.6 percent). Cipla, BPCL, Larsen & Toubro and Hero MotoCorp also advanced by over 4 percent. On the other hand, Hindustan Unilever, Infosys, and Tata Consumer Products declined 3.8 percent, 2.9 percent and 2.1 percent, respectively.  

FII, DII investments  

Data available from ACE Equity showed that in June second week DIIs have bought equity worth Rs 6,393 crore as of June 14. While, FIIs reversed the trend of selling and purchased Rs 11,730 crore of equities in this week.

Market Macros: According to Vinod Nair, Head of Research at Geojit Financial Services, the domestic market remained marginally positive this week, albeit with a temporary blip in momentum due to a lack of fresh triggers. Nonetheless, mid and small-cap sectors demonstrated outperformance, as sentiment has enhanced again for growth-based stocks.

The outcome of the FOMC meeting was hawkish; market expectations have shifted from two rate cuts in CY24 to just one. However, the stability of US inflation provided some relief. “Domestic CPI data suggests a gradual decline in inflation. Though the last mile towards the inflation target remains sticky, given the expectation of a normal monsoon, investors are hopeful that the MPC will be one step closer to the easing cycle", Nair said.

Nifty Outlook: Rajesh Bhosale, Equity Technical Analyst at Angel One, expects the market undertone to remains positive, “Traders should consider buying on dips and booking profits at higher levels”, he said.

On market performance he said, the last week was characterized by a steady climb in Nifty with prices making fresh new highs throughout the week. However, traders found it challenging to trade within the key indices due to sluggish intraday movements. On Friday as well, Nifty opened positively but lacked follow-through buying, remaining confined within a 50-point range and ending with a 0.29% gain, just above 23450. For the week, Nifty added 0.75% to the bulls' kitty.

He added, summing up the weekly trading activity for the key indices, it was a dull week. This is evident on the daily chart, which shows a series of small-body candles indicating bullish fatigue and a time-wise correction phase. Throughout the week, prices remained within the 23300 - 23500 range. “For the coming week, this key range extends to 23200 - 23600. Beyond this zone, momentum is expected to pick up again, as the hourly Bollinger Band has contracted significantly. According to technical analysis, a period of low volatility is typically followed by high volatility. Traders are advised to monitor these levels and adjust their trades accordingly”, Bhosale said.

Bank Nifty:

According to Kunal Shah, Senior Technical and Derivative Analyst at LKP Securities, the Bank Nifty continued its consolidation phase and was unable to surpass the 50000 mark, where the highest open interest is built up on the call side. The index needs to decisively surpass the 50200 mark to confirm an upside breakout towards the 51000 level. “The lower-end support is placed at the 49500-49400 zone, and a break below this will open gates for further downside towards 49000," Shah said.