Equity Movement Likely to be Restricted by Global Cues, Delta Woes

The broader market was range bound last week with the Nifty 50 ending at 15689.8, down by -0.2 per cent, whereas the counterpart BSE Sensex was also down by  -0.2 per cent, ending at 52386.19.

A Broader Outlook

Though the selling pressure observed in the global market can have its impact on Indian equity, it should be restricted. Look out for levels of 15600 to 15800 in the Nifty and around 52000 to 52800 in the Sensex as nearby support and resistance.

Covid Scenario

With Delta variant of the Covid virus spreading across the globe and the number of cases on the rise, India is in a better position with fresh cases on a decline. This can act as a positive if going forward, different state governments opting for further relaxation. Of course, the fear of the third wave still being there.

Inflation and IIP Numbers

Though the retail and wholesale numbers along with the Index of Industrial Production numbers do not have huge direct impact on equities, the data is of importance. The inflation numbers for June 2021 are expected to go up further which will be eyed by the RBI. On other hand, the IIP numbers for May 2021 might show an annual rise owing to lower base, it will be its sequential growth that would be eyed more.

Earnings Outlook

Though the TCS results were not on expected lines, the markets would hope high on the upcoming results of major companies like Infosys, Wipro, Tech Mahindra and HDFC Bank. One can expected positive momentum in these stocks.

IT Sector

Though the Nifty IT index was down by 1.2 per cent to 28662.2 in the last week, owing to slightly subdued results of TCS that witnessed the net profit going down by 2.6% on sequential basis. However, with the results of Infosys, Wipro, Mindtree, Larsen & Toubro Infotech, and L&T Technology coming next week, these stocks would in the lime-light as the overall guidance to be given by these companies seems to be positive.

Auto Sector

The retail auto sales numbers came as a positive which witnessed an overall growth of 23 per cent year-on-year across categories in June 2021. The next week will see data on wholesale sales numbers for June from the Society of Indian Automobile Manufacturers. For the auto segment, the relaxation in the lockdown is a positive and the momentum should continue for the next quarter with the ramp-up in the demand. The Nifty Auto was down 2.5 per cent to 10420.30 last week.

Metals Sector

This segment was positive last week with the Nifty Metal Index rising 2.8 per cent to 5273.60. CARE Ratings has raised its long-term outlook for JSW steel, Tata steel and Jindal Steel. Metal companies should trade in a range-bound manner next week awaiting the earning of key companies.

Cement Sector

Though the shares of major cement companies did rise last week, the cyclical sector will feel pressure as the cement demand is typically low during the monsoon season impacting the downside pressure on cement prices.

Oil Sector

The segment is always in the limelight, mainly owing to the upstream company – Reliance Industries that was under the wind with its price going down by 2.7 per cent. Going forward, the segment will see the pressure across down-stream and up-stream companies.

Banking Sector

Rather than stocks, the Bank Nifty is the most-tracked index owing to its activities in the derivatives segment. The Bank Nifty Index went up by 0.8 per cent to 35071.95 last week. With HDFC Bank to come out with its result on Saturday, the stock would be in the eyes of investors. With no other major triggers for the segment, the stocks can be range-bound.

The author is a CFA and is HoD – Financial Markets and FinTech at ITM B-School

DISCLAIMER: Views expressed are the author's own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.