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Indian stock markets ended last week on a strong note, with the Sensex and Nifty rising more than 1% on Friday. Over the week, the Sensex gained 582 points (0.75%), while the Nifty advanced 127 points to close at 24,334.
The rally was led by stocks such as Tech Mahindra, Kotak Mahindra Bank, TCS, Reliance Industries, ICICI Bank, Hindustan Unilever, Mahindra & Mahindra, Axis Bank, Bajaj Finance, HDFC Bank and Infosys, which rose between 1% and 4%. Meanwhile, Sun Pharma, Trent, Bharti Airtel and UltraTech Cement ended slightly lower.
Several domestic and global developments are expected to influence market sentiment in the coming week.
Q1 earnings season gathers pace
The June quarter earnings season will pick up momentum, with 256 companies scheduled to announce their results. Major companies reporting this week include Paytm, Bajaj Auto, TVS Motor, Adani Power, BPCL, Eternal, IndusInd Bank, HPCL, UltraTech Cement, Infosys and Bank of Baroda.
According to Geojit’s Head of Research Vinod Nair, positive business updates and expectations of healthy corporate earnings continue to support investor confidence.
Iran-US conflict
Tensions in the Middle East remain a major concern after fresh military action between Iran and the US. The renewed conflict has raised fears of wider regional instability, which could increase volatility in global financial markets.
Rising crude oil prices
Oil prices have climbed sharply due to concerns over supply disruptions linked to the Middle East conflict. Brent crude rose to around $88 a barrel, while US West Texas Intermediate (WTI) traded above $82 a barrel. Both benchmarks recorded strong weekly gains, supported by worries over disruptions to shipping routes and oil supplies.
Higher crude prices remain a concern for India, which imports most of its oil requirements.
Global technology sell-off
Technology stocks across global markets remained under pressure last week. US chipmakers led the decline, pushing the Philadelphia Semiconductor Index into bear market territory. The S&P 500, Nasdaq and Dow Jones all ended lower for the week.
Several Asian and European markets also witnessed weakness in technology stocks. However, analysts believe Indian IT shares have remained relatively resilient despite the global sell-off.
Rupee under pressure
The Indian rupee recorded its steepest weekly fall since May, ending at 96.28 against the US dollar. Rising crude oil prices and strong demand for dollars from importers weighed on the currency.
Analysts expect the rupee to remain weak in the near term, with global developments, oil prices and foreign investment flows likely to determine its direction.
FII activity
Foreign institutional investors (FIIs) turned net sellers last week, withdrawing Rs 8,743.35 crore from Indian equities. Domestic institutional investors (DIIs), however, continued to support the market by investing Rs 8,790.75 crore.
Outlook
Despite global uncertainties, Indian equities managed to end the week in positive territory. According to Vinod Nair, investors are increasingly shifting towards large-cap stocks due to attractive valuations and better earnings visibility.
IT stocks performed well on expectations of stronger earnings, while consumer durable companies also gained on hopes of improved domestic demand. Realty and metal stocks, however, remained under pressure.
Going forward, investors will closely monitor Japan’s inflation data, India’s Purchasing Managers’ Index (PMI), crude oil prices and developments in the Middle East. Analysts also believe India’s strong economic fundamentals and domestic demand could help attract global investors if volatility continues in other emerging markets.
Technical outlook
According to LKP Securities Senior Technical Analyst Rupak De, the Nifty’s overall trend remains positive as it continues to trade above its key moving averages. He expects the index to remain firm and potentially move towards 24,800 in the near term.
Immediate support is placed at 24,200. A break below this level could lead to a period of consolidation.
