Indian equity benchmark indices Nifty and Sensex gained more than 4% last week with positive closing each day thanks to buying by FIIs, recovery in global market, some cool off in dollar index and commodity market, easing inflation fear, better than expected Q1 earnings so far.
This week is going to be an event heavy therefore we can expect a spike in volatility. The market will react to 30% of Nifty’s earnings on Monday morning because we have results of Reliance, ICICI Bank, Kotak Bank, and Infosys over the weekend. Apart from this, many Nifty50 companies will announce their Q1 earnings during the weekdays.
We will have July month F&O expiry on Thursday which may also lead to volatility in the overall market.
On the global front, the US FOMC meeting outcome on 27th July will be the most critical event and the movement of the dollar index and crude oil prices will be other important factors.
It will be interesting to see FIIs’ behavior because, after a long time, they become a net buyer for the week.
Technically, the market is in strong bullish momentum however 16800 is an immediate hurdle for the Nifty then 200-DMA around 17000 will be the next critical hurdle therefore 16800-17000 zone will be a sacrosanct supply zone where we can expect some profit booking however a decisive move above 17000, may lead to a strong rally in the market. On the downside, 100-DMA around 16500 will be an immediate support level then 16340 will be the next critical support level.
Bank Nifty has more strength as it manages to close above its 200-DMA however 37000 level is a major trendline resistance; above this, we can expect a major rally towards 37500/38000 levels. On the downside, 36000-35700 will act as an immediate and strong demand zone.
If we look at the derivative data then the Open interest distribution for the 28th July expiry suggests a range of 16500-17000. Long exposure of FIIs in index future has jumped to 45% and put call ratio is placed at 1.42 mark, both are indicating a positive bias.
Mr. Santosh Meena, Head of Research, Swastika Investmart Ltd.
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