Dalal Street Week Ahead: Key Hurdle For Nifty At 16,600, Focus Shifts To Q1 Earnings

The Indian equity benchmarks logged in third straight weekly gain for the week ended June 8 as easing commodity and crude oil prices ignited hopes that inflation will cool down going ahead and central banks across the world will hold back interest rate hikes, analysts said. 

For the week, Sensex advanced 1,574 points or 2.97 per cent to close at 54,482 and Nifty gained 468 points or 2.97 per cent to settle at 16,221.

Foreign institutional investors continue to withdraw money from the Indian market for the tenth consecutive month until June month. They have so far this year withdrawn Rs 2.21 lakh crore from Indian equities.

Buying was visible across the board as all the 15 sector gauges compiled by the National Stock Exchange ended higher led by the Nifty PSU Bank index's nearly 7 per cent gain. Nifty Consumer Durables, FMCG, Realty, Private Bank, Bank and Financial Services indices also rose between 4-5 per cent.

Mid- and small-cap shares also witnessed buying interest as Nifty Midcap 100 index rose 4 per cent and Nifty Smallcap 100 index climbed 3 per cent.

Titan was top Nifty gainer in the Nifty 50 basket of shares, the stock jumped 10 per cent to Rs 2,144 after the Tata group firm said its sales in the April-June quarter jumped nearly three-fold on a year-on-year basis.

"Sales in Q1 FY23 grew 205 per cent year-on-year (YoY) on a low base and clocked a 3-year CAGR of 20.5 per cent over Q1 FY20," Titan said.

While its jewellery division, which contributes around 85 per cent of its revenue, reported 207 per cent growth and added 19 new stores during the quarter, taking the total store count to 463.

Hindustan Unilever, ICICI Bank, Larsen & Toubro, UPL, Tata Motors, Britannia Industries, Bajaj Finserv and Power Grid also rose between 6-9.4 per cent.

On the flipside, ONGC, HDFC Life, JSW Steel, TCS, Cipla, Reliance Industries and Wipro were among the losers.

Corporate Earnings In Focus

Going ahead market participants will focus on June quarter earnings of Indian companies. TCS was the first Nifty company to report its earnings on Friday. India's largest IT services firm Tata Consultancy Services (TCS) on Friday reported a 5.2 per cent year-on-year rise in consolidated net profit to Rs 9,478 crore for the first quarter ended June 30. 

The consolidated revenue from operations increased 16.2 per cent year-on-year to Rs 52,758 crore in the first quarter of FY23.

Avenue Supermarts, which owns and operates retail chain D-Mart, on Saturday reported over six-fold jump in its consolidated net profit to Rs 642.89 crore for the quarter ended on June 30, 2022, helped by a "very good recovery" in overall sales and a comparative low YoY base.

The company had posted a net profit of Rs 95.36 crore in the April-June quarter a year ago, said Avenue Supermarts in a BSE filing.

Its revenue from operations was up 93.66 per cent to Rs 10,038.07 crore during the quarter under review against Rs 5,183.12 crore in the corresponding quarter last fiscal.

Delta Corp, HCL Technologies, ACC, L&T Infotech, Tata Elxsi, Federal Bank, Jindal Steel and L&T Technology Services are some of the prominent companies which will declare their June quarter earnings, according to data from BSE.

Nifty and Bank Nifty Technical Setup

Nifty is forming higher highs and higher lows on a daily chart which indicates positive trend for markets as of now, explains Sumeet Bagadia, executive director at Choice Broking. 

"The trend may remain bullish for the short term but simultaneously profit booking from higher levels is expected as well. The Nifty may find strong support around 16,000 levels while on the upside 16,600 may act as strong resistance," Bagadia says.

Bank nifty has support at 34,200 levels while resistance at 36,100 levels. As we step towards the new earnings season, the prime focus of the market will turn towards quarterly numbers, Bagadia adds.

The last three weeks of the rebound have certainly eased some pressure but cues are still mixed, which continue to trigger erratic swings in between. Apart from the US recession worries, participants should brace themselves for volatility owing to the earnings, says Ajit Mishra, VP - research at Religare Broking. 

Amid all, indications are favourable for a further rebound in the index and the Nifty could test the 16,500 zone while the 15,650-15,900 zone would provide the cushion, in case of any dip, Mishra adds saying that he prefers stocks in auto and FMCG space but also advises nibbling selective shares in banking and financial service space.