Podcast | A morning walk down Dalal Street: Nifty has to hold above 10,770 for move towards 10,888

What a week it has been for equity markets – higher MSP for farmers, trade tensions between the US and China, rising crude oil prices and rupee depreciation. But, Indian markets managed to climb all wall of worries and closed 0.54 percent higher for the week ended July 6.

It closed below 10800 levels but above 10,770 which is a good sign. Also, it is trading above all its crucial short-term moving averages

However, the big consensus among the analyst community is that the downside looks fairly limited but investors should wait for a breakout or a breakdown on either side before initiating fresh positions

It has to continue to hold above 10777 zones to extend its move towards 10835 then 10888.

A drift below 10740 - 10735 zones could drag it towards 10700 then 10660 zones.

If we look at the institutional activity, FPI sold shares worth Rs 968.18 crore while DII bought shares worth Rs 1480 crore, according to provisional data.

The rupee on Friday closed marginally higher against the US dollar, tracking gains in Asian currencies market. The rupee ended at 68.88 a dollar, up 0.09% from its previous close of 68.94.

Big News:

The week will see the onset of earnings season for the June quarter. Along with some index heavyweights, around 25 BSE companies will be declaring their results for the quarter under review.

The trends from this quarter will be crucial as they will be the first for this financial year, while the last quarter of last year gave healthy indications, barring banks.

Three major names that will be declaring their results in the upcoming week are IndusInd Bank, Tata Consultancy Services (TCS) and Infosys.

Analysts at Edelweiss expect revenue growth for IT companies to accelerate in the June quarter and an improvement in management commentaries.

“While TCS is expected to lead the pack with 3.1 percent QoQ USD revenue growth, HCL Tech is estimated to grow 2.4 percent QoQ (2.1 percent inorganic) and Infosys 2.3 percent. Wipro and Tech Mahindra are estimated to dip 2 percent each, QoQ,” the brokerage house said in a report.

Technical Setup:

The index formed a ‘Shooting Star’ kind of pattern on the daily charts and a “hammer’ kind of pattern on the weekly scale.

Investors are advised to remain cautious till the time a clear trend emerges. For a decisive breakout to happen, Nifty50 has to close above 10,930 and on the downside 10,600 is a crucial support and a breach of which could extend selling pressure.

Three Levels: 10,700, 10835, 10930

Max Call OI: 10800, 11000

Max Put OI: 10600, 10700

Trading Ideas:

We spoke to 5nance.com and here’s what they have to recommend:

Indo Count Industries: Buy| Target: Rs. 82 | Stop loss: Rs 65 | Return: 13%

Berger Paints India: Buy | Target: Rs. 314 | Stop-loss: Rs. 278 | Return 6%

Avanti Feeds: Sell | Target: Rs. 452 | Stop-loss: Rs. 495 | Return: 5%