Weekly market wrap: Sensex climbs 1,574 points; Titan, HUL rally 10%

Softening crude oil prices and easing foreign investors' selling lifted the market sentiment for the third straight week. The benchmark equity index BSE Sensex surged 1,574 points, or nearly 3 per cent, to 54,481.84 on July 8 against 52907.93 on July 1. Likewise, the 50-share NSE Nifty index advanced 468.55 points, or 2.97 per cent, to 16,220.60 during the same period.

With a gain of 10 per cent, Titan Company emerged as the top gainer in the Nifty50 pack. It was followed by Hindustan Unilever (up 9.40 per cent), ICICI Bank (up 7.36 per cent), Larsen & Toubro (up 7.33 per cent) and UPL (up 7.26 per cent).

Vinod Nair, head of research, Geojit Financial Services said, “Consolidation in commodity prices and reduced selling by FIIs aided markets. Crude prices fell over recessionary fears. However, the fall has boosted the appetite for consumption, chemicals, logistics and OMCs as it will reduce the cost burden of these sectors.”

“Falling crude prices will calm inflationary fears, reducing the burden on central banks to raise interest rates aggressively at upcoming meetings. Positive domestic macro and business data by banks were the other major factors that helped in boosting market sentiment,” Nair said.

Foreign institutional investors have sold shares worth Rs 4,096 in June so far. However, they sold shares worth over Rs 50,200 crore last month. Crude oil prices have also declined to around $103 per barrel from $106 per barrel last week. The price of the commodity was hovering around $108 per barrel on June 8.

Sectorwise, the BSE Capital Goods index advanced 5.97 per cent. BSE FMCG, Realty, Bankex, Power, Auto and Metal gained between 2 per cent and 5.50 per cent.

“At present, investors are preferring value over growth. Defensive sectors like FMCG can perform better due to strong cash flow, high governance, dividend policy and stable earnings growth. As we step towards the new earnings season, quarterly announcements will be the prime focus of the market with an eye on the updated guidance of 2023 financial year," Nair added.

In the forthcoming week, market participants would be eyeing the data of the Index of Industrial Production (IIP) on July 12. The annual inflation rate in India edged down to 7.04 per cent in May of 2022 from an 8-year high of 7.79 per cent in the previous month. On the same day, Consumer Price Index (CPI) is also scheduled to release.

Traders will also be looking forward to the Wholesale Price Index (WPI) data for the month of June, scheduled to be released on July 14. Wholesale price inflation rate in India moved up to 15.88 per cent in May 2022 from 15.08 per cent a month earlier.

The coming week would also be important as investors brace for a slew of earnings from the Industry’s big-wigs such as Avenue Supermarts, HCL Technologies, Mindtree, Tata Metaliks, ACC, Larsen & Toubro Infotech, Tata Elxsi, Tata Steel Long Products, Federal Bank, Jindal Steel & Power.

Meanwhile, PSU stocks too could hog some limelight in the coming week as Finance Minister Nirmala Sitharaman is going to hold a review meeting with the heads of public sector lenders to discuss various issues and to review the progress of various government schemes related to agriculture and allied sectors.

Sharing his view on the second half of the ongoing calendar, Rahul Shah, co-head of research, Equitymaster said, “While the stock market has gone up this week, historical data does not support a full-fledged revival in the second half of this year.”

“You see, there have been 11 occasions in the past 30 years where the markets have earned a negative return for the first half of the year. And only in 2 out of those 11 have the markets recovered during the second half to close the year with decent returns. So, history is definitely not in favour of the markets recovering in the second half. Even at the macro level, there are still a lot of headwinds like inflation, crude and geopolitical events that may nip any recovery in the bud,” Shah said.