After The Bell: Nifty below 15,700; what should investors do on Friday?

Indian market closed in the red for the fourth consecutive day on July 1, as microdata weighed on sentiment. The S&P BSE Sensex fell 164 points to close at 52,318, while the Nifty50 ended 41 points lower at 15,680.

Falling COVID cases, however, gave some confidence to the bulls, while June sale numbers cheered the auto sector that closed in the green.

“Selling was triggered in the domestic market as investors remained cautious about the increasing Covid cases, especially in Asia. Despite the easing of restrictions, the manufacturing PMI data for June contracted to 48.1 from 50.8 in the previous month,” Vinod Nair, Head of Research at Geojit Financial Services said.

The drop in rate of domestic infection and progress in vaccination provided some comfort to the market. Positive auto sales numbers for June helped the sector to trade in positive territory, he said.

Sectorally, the action was seen in auto, consumer discretionary, FMCG, and consumer durables, while profit booking was visible in power, telecom, IT, and Energy stocks.

On the broader markets front, the BSE midcap index fell 0.19 percent and the smallcap index rose 0.3 percent.

Here’s what experts suggest investors should do on July 2:

Expert: Shrikant Chouhan, Executive Vice President, Equity Technical Research, Kotak Securities

The Nifty remained sluggish throughout the day and gradually declined to 15,667. The fall was led by the decline in technology, banks, and commodities, which have a large weight in the index.

Volatility declined, a sign that the bulls are resting and they could bring volatility back. India VIX, the volatility indicator, closed at 12.63, the lowest level in the 18 months.

On a monthly basis, the market remained in a range of 500 points, which is an unusual and even narrow range over the last six months. Traders need to be careful when adding long positions at high levels as such markets invite unpleasant events.

For the day, the Nifty closed below 15,700 and on we may see the market hitting the lower boundary, which is between 15,650 and 15,600, the next day. Our strategy should be to buy on dips that are between 156,70 and 16,620.

Keep a final stop loss at 15,550.  On the higher side, 15,700-15,745 and 15,800 would be major obstacles.

Expert: Mohit Nigam, Head, PMS-Hem Securities

The auto numbers for June are out. Maruti Suzuki, Tata Motors, and M&M have all shown a jump in sales compared May.

Repetitive profit booking through this week signals that the bulls are not coming strong. Though with the positive notes in the market, we feel the further rally is intact.

The Nifty is getting closer to the support of 15,600 and will take further support at these levels to rise to newer highs in the coming sessions.

Expert: Gaurav Ratnaparkhi, Head, Technical Research, Sharekhan by BNP Paribas

The Nifty posted a negative daily close for the fourth consecutive session, however, the hourly chart shows that each leg of the decline is getting smaller. This can indicate selling exhaustion.

With the decline, the Nifty has come close to testing the swing low of 15,673. Though the level was breached intraday, the index managed to stay above it on a closing basis. The Nifty has reached the lower end of a rising channel, which is near 15,650.

So, the index is trading near important support. A breach of the lower channel line on a closing basis can led to prolonged consolidation. However, till then there is scope for recovery

Expert: Ajit Mishra, VP - Research, Religare Broking Ltd

Markets remained lacklustre and ended marginally lower following subdued global cues.

Markets are closely watching global indices for some signal as indications are mixed on the domestic front. The Nifty has been hovering in the 15,450-15,900 zone for almost a month now and is trading in the middle of the band.

A break below 15,650 will pave the way for a further slide. It will be prudent to keep a check on positions and prefer defensive in the current scenario.