Market to consolidate further; earnings, macro data in focus: Experts
The market faces headwinds from the advent of a possible third COVID wave, persistent inflation readings prompting a potential rate increase, and volatility around the US Fed taper talk, says Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services.
In the last week, market ended marginally lower due to unsupportive global cues, muted rainfall, and worries over the third coronavirus wave weighed on investor sentiment. Last week, BSE Sensex fell 98.48 points (0.18 percent) to end at 52386.19, while Nifty50 ended 32.4 points lower (0.20 percent) to close at 15689.8 levels. Here are analysts’ view on the market for the coming week:
Ashis Biswas, Head of Technical Research at CapitalVia Global Research | The market continued to witness volatility at its recent swing low and stayed in the range between 15650 to 15750 (Nifty 50). The market's short-term technical condition appears like a consolidation after the recent correction witnessed on Thursday. While it is subject to further price action evolution, the market suggests it is prudent to wait for a decisive breakout above 15800 and technical factors to improve before going long in the market. The traders are advised to refrain from building a new buying position until the market sees any further improvement and breakout above 15800. The volatility to expand in Friday's trading session, indicating a likely change of trend.
Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services | Nifty has got stuck in a wider range of 15450 to 15915 levels from last 28 trading sessions and decisive directional move is missing in absence of follow up activities. Now, it has to cross and hold above 15750 zones to witness an up move towards 15850 and 15915 levels while on the downside support exists at 15600 and 15500 levels. Equity markets have largely looked through the turbulent period of April/May’21 and have shown strong resilience, with indices trading near all-time highs – buoyed by best-in-decade earnings delivery in FY21 and the expectation of an even better FY22. The primary markets are also seeing a flurry of activity with several IPOs lined up. The market faces headwinds from the advent of a possible third COVID wave, persistent inflation readings prompting a potential rate increase, and volatility around the US Fed taper talk. Current valuations, while not expensive, are not lucrative from a risk-reward perspective. Meanwhile, balance sheets and cash flows have improved in FY21 as corporates tightened costs and deleveraged. The gradual unlocking of the economy and an improved demand backdrop do offer bottom-up opportunities. Consistent earnings delivery v/s expectations is critical for further outperformance.
Nirali Shah, Head of Equity Research, Samco Securities | The coming week will witness results to kick off the FY22 earnings season. As India Inc sees a stable recovery in sights and improving prospects across the board, broad-based expectations from Indian counterparts remain high. Despite favourable sentiment, some stocks might witness spurts of volatility guided by traders. However, one should keep the low base of last year in mind, as it can boost this time’s YoY growth numbers. Investors should consider profit booking in certain overpriced stocks on each near-term opportunity.
Ajit Mishra, VP Research. Religare Broking | In the coming week, markets would take cues from earnings announcements and macroeconomic data i.e. IIP & CPI Inflation on July 12 and WPI Inflation on July 14. Besides, global cues, monsoon progress and updates on the new COVID variant will be closely monitored by investors. On the earnings front, big names like Infosys, Wipro, HDFC AMC, Mind tree and Tata Elxsi would announce their numbers along with several others. Nifty is witnessing time-wise correction so far as it has retraced marginally from its record high. It has been hovering in a broader range of 15,450-15,900 since the beginning of June month and currently trading in the middle of the band. Indications are in the favour of further consolidation ahead. And, with the beginning of the earnings season, we expect volatility to inch higher on the stock-specific front as well. Amid all, it is prudent to remain extra cautious in the selection of sectors and stocks for short term trades and limit naked leveraged positions. Investors, on the other hand, shouldn’t worry about the intermediate corrective phase and focus on the earnings season for cues.