With Nifty Surging Nearly 9% In Last One Month, Has Indian Market Defeated Bears?

The Indian equity benchmarks staged a strong rally for the week ended July 29 and closed at their highest levels since April 22, 2022. For the week, Sensex jumped 2.67 per cent or 1,498 points to close at 57,570 and Nifty 50 index climbed 2.62 per cent or 439 points to settle at 17,158.

For the month of July, the Nifty surged nearly 9 per cent and Sensex advanced 8.6 per cent, posting best month of the current year.

Is The Bear Phase Over For Indian Equities? 

The sharp up move in July came on the back of combination of reasons. Better quarterly earnings, FII buying and expectations that the US Fed may temper its aggressive interest rate hikes boosted investor sentiment, analysts said.

The relentless selling by foreign investors appears to have taken a breather as they have turned net buyers so far this month with an investment of nearly Rs 1,100 crore in the Indian equity market.

This comes following a net withdrawal of Rs 50,145 crore from equities in June. This was the highest net outflow since March 2020, when they had pulled out Rs 61,973 crore from equities, data with depositories showed.

On Friday, FIIs bought shares worth Rs 1,046 crore after buying stocks worth Rs 1,600 crore on Thursday, data from the National Stock Exchange showed.

"Pessimism was too high and markets were oversold, corporate earnings have been good, fed rate hike and bond yields were discounting that inflation may have peaked and globally we were seeing that there was too much negativity that got converted because domestic institutional investors were buying and we got some good data on FII front as they turned buyers and stopped selling," Sanjiv Bhasin of IIFL Securities told Outlook Business.

The bulls have been on a rampage especially in the last week. The US Fed hiked the policy rates by 75 basis points which was on expected lines and largely factored in by the market, says Sumeet Bagadia, executive director at Choice Broking .

During the week, metal stocks witnessed strong buying interest as Nifty Metal surged 7.69 per cent while Media and Nifty Services indices witnessed gains of 3 to 5 per cent each. Overall, all sectors capitalise their gaining streaks.

Bajaj Finserv was top Nifty gainer, the stock climbed 18 per cent after its profit jumped 57 per cent jump to Rs 1,309 crore in the first quarter ended June 30, on healthy earnings by its subsidiary companies.

In the year-ago period, the company had posted a net profit of Rs 833 crore.

Nifty has formed bullish candle on a weekly chart which suggests an upside rally for an upcoming session as Nifty has closed above its 200-day moving average, explains Bagadia.

“Nifty has finally given closing above 200-DMA that is 17,025 levels which suggest a northward journey. From the open interest data, on the call side the highest witnessed at 17,500 level while on the put side was at 16,900 level and followed by 16,800. The momentum indicators moving average convergence divergence (MACD) and stochastic were trading with a positive crossover on a daily time frame which suggests strength in the counter,” says Bagadia.

The short-term support for Nifty has shifted around 17,000 levels while on the upside 17,450-17,500 may act as an immediate hurdle, he adds.

We have to see more data and how global flows pan out. I am very sure that if the dollar weakens which it has started to then you can see emerging markets outperform, says Bhasin.

Nifty can face resistance around 17,400-17,500 as we Nifty has staged a sharp up move, but we can see outperformance in IT and Metal stocks IT metals stocks, Bhasin says.