This week, the benchmark indices rose nearly 3 per cent each, in what was their best weekly performance in recent months. The gains in the indices came as investors focused on the better-than-expected June quarter earnings so far from Nifty50 companies and signs of economic recovery picking up pace.
Cues from global markets were also supportive throughout the week as investors continued to buy risky assets despite a fall in the US government bond yields.
Investors will take comfort from the Reserve Bank of India’s optimism for economic recovery in the second half of 2021-22 even as the central bank made the first steps towards normalisation of liquidity policy.
“While there were no big-bang announcements today, the extension given to the earlier measures announced is positive since some sectors are yet to fully recover from the second wave of Covid-19 impact. We believe housing finance companies such as HDFC, CanFin Homes and large banks such as SBI, ICICI Bank are comfortably placed as interest rates remain in a sweet spot,” said Naveen Kulkarni, chief investment officer at Axis Securities.
Technical analysts suggested that Nifty50 could inch higher towards 16,400 and 16,500 points going ahead as the breakout has stirred buying momentum in index stocks.
“In absence of any major event, earnings and global cues will dictate the market trend. We suggest keeping a close watch on the banking and financial packs, as they have the potential to further fuel the momentum. Going ahead, in case of any dip, the 16,150-15,950 zone would act as a cushion in the Nifty,” said Ajit Mishra, vice president of research at Religare Broking.
The financial pack will remain the key to any upside in the benchmark indices. The Nifty Bank rose 3.5 per cent this week, outperforming the Nifty50 index led by sharp gains in
and ICICI Bank. However, with concerns rising around the financial health of Vodafone Idea and Future Group, and banks with exposure to both the corporate entities could see some selling pressure in the coming sessions.
Primary market activity may also weigh on sentiments as four major IPOs hit the market. CarTrade Tech, Chemplast Sanmar, Nuvoco Vistas and Aptus Value Housing Finance India will look to raise more than Rs 12,000 crore from investors.
