A morning walk down Dalal Street: Geopolitical turmoil drags Nifty, 11,635 crucial

The last week was a volatile one for the Indian market. Nifty, after reclaiming 11,800, failed to keep the momentum going as geopolitical concerns spoiled the party for bulls.

The index closed 0.84 percent lower while the S&P BSE Sensex ended 0.65 percent down for the week ended June 21.

In the broader market space, BSE Midcap index fell 0.65 percent while the BSE Smallcap index saw a decline of 1.96 percent in five sessions.

The carnage was seen in the broader market space. Data for BSE 500 index suggest that as many as 23 stocks fell 10-30 percent in just five sessions including Jain Irrigation, Graphite India, Reliance Communications, SpiceJet, Dilip Buildcon and Birla Corp. among others.

The market remained volatile throughout the week amid dovish commentary from US Federal Reserve as well as European Central Bank (ECB). However, trade war concerns, RBI minutes of the meeting that fuelled growth worries, rise in crude oil prices, delay in monsoon and a fall in foreign investor flows capped the upside.

The rupee dived 14 paise to close at 69.58 against the US dollar on June 21, pressurised by firming crude oil prices amid intensifying geopolitical tensions in the Gulf region.

FPIs were net sellers in Indian markets on June 21  for Rs 730 crore while the DIIs were net buyers to the tune of Rs 445 crore, provisional data showed.

Big news:

The council decided to allow the use of Aadhaar by businesses to register with GST-Network. It also extended the date for filing annual returns under the Goods and Services Tax (GST) regime by two months to August 30 while the one-form new GST returns filing system will be applicable from January 1, 2020.

The GST Council also extended the tenure of the anti-profiteering authority by two years and approved imposing a penalty of up to 10 percent on entities not passing on benefits of GST rate cuts to consumers.

Nirmala Sitharaman, who took over as Finance Minister last month, presided over the 35th meeting of the GST Council. All states, except Karnataka, Mizoram, and Telangana, were represented in the meeting.

It has been proposed to reduce GST rate on electric vehicles to 5 percent from the current 12 percent and that on the electric charger to 12 percent from 18 percent and has been forwarded to the fitment committee for fine-tuning.

Technical view:

The index closed below 11,800 and formed Bearish Belt Hold pattern on the daily charts and bearish candle on the weekly scale.

For the week, the index lost 0.8 percent, continuing downtrend for the third consecutive week.

As long as index sustains above 11,635, one should retain a positive outlook and consider such dips as an opportunity to go long.

Three levels: 11705, 11827, 11900

Max Call OI: 12000, 11800

Max Put OI: 11700, 11500

Stocks in news:

Adani Ports & SEZ is tapping the international debt market to raise up to $1 billion to fund its capex plans and also to retire some of its debt, according to merchant banking sources.

Drug firm Neuland Laboratories on June 21 said it has received five observations from the US health regulator after inspection of Unit 1 of its facility at Bonthapally in Telangana.

Drug major Sun Pharmaceutical Industries on June 21 said it has received four observations from the US health regulator for its Halol facility in Gujarat.

Technical recommendations:

We spoke to Axis Securities and here’s what they have to recommend:

ICICI Bank: Buy| Target: Rs 446-451| Stop loss: Rs 418| Upside: 4-5 percent

CONCOR: Buy| Target: Rs 571-577| Stop loss: Rs 537| Upside: 4-5 percent

NMDC: Buy| Target: Rs 113-117| Stop loss: Rs 103| Upside: 5-9 percent