The week gone by was volatile and contrary to expectations ended with losses. It did show positive signs and despite losing on the first four days of the week, registered gains on Friday, leaving a lot of hope and expectations for the coming week. BSESENSEX lost 721.06 points or 1.32% to close at 53,760.78 points while NIFTY lost 171.40 points or 1.06% to close at 16,049.20 points. The broader indices saw BSE100, BSE200 and BSE500 lose 0.66%, 0.37% and 0.26% respectively. BSEMIDCAP gained 0.88% while BSESMALLCAP was up0.54%. This makes one believe that the breadth of the market was good. 

The Indian Rupee continued to be under pressure and lost 63 paisa or 0.79% to close at Rs 79.88 to the US Dollar. This is the lowest closing of the Rupee against the dollar on a weekly basis. Dow Jones lost on the first four days of the week and gained on Friday. At the end of the week, the closing was flattish with Dow Jones losing 49.89 points or 0.16% to close at 31,288.26 points. The gains on Friday were 658 points. 

In what could be termed as an important news, RBI has permitted settlement of international trade in Indian Rupees. This will go a long way in mitigating operational risks of importers and exporters. It will also help in a big way of making the rupee convertible in the longer run. 

Results from technology and IT companies highlighted the rising costs associated with substantially higher attrition and therefore rising employee costs. After TCS, it was the turn of HCL Tech which faced the same issue. Post results, the share of HCL was under pressure and lost Rs 101 or 10.26% to close at Rs 883. The BSETECK and BSEIT were the biggest sectoral losers of the week losing 5.87% and 5.82% respectively. 

EV or electric vehicles seem to have a strange set of problems. It all began with the infrastructure required for the charging of EV’s. Then it was the issue of some of the electric scooters catching fire. Now it is the financing of vehicles by banks and NBFCs. The cost of an EV vehicle is roughly 2/3rd for the battery and 1/3rd for the car. For example, a vehicle costing Rs 12 lacs would be broken up as Rs 8 lacs approximately for the battery and Rs 4 lacs for the car. How the battery behaves or is maintained by the user will decide the residual value of the car for the lender. Herein lies the problem and the conflict area. One would be sure that going forward the issue would get resolved, but for the time being, people looking to finance an EV need to reassess their requirements. 

Markets seem to be showing signs of resilience even though they were down for the week gone by. The week was choppy and FPI selling continued even though it was lower than the Rs 2,600 crs average per trading day of June 22. The net sales for the five-day week were at Rs 5,914 crs or a daily average of Rs 1,182 crs. For the first fortnight of July, FPIs have net sold Rs 10,459 crs or Rs 1,045 crs as a daily average. This is not to suggest that FPI selling would stop, but just that probably they could start buying sooner than later. The attractive value of the Rupee is another positive factor from an FPI perspective. The fact that there would be another rate hike of most likely 75 basis points in the US has also been discounted by the markets. 

Coming to the week ahead, one should see markets consolidating from levels achieved last week. Friday saw a decent level and gives hope for the immediate week. On resistances, the first level would be top of the gap which we had crossed last week at 54,205 and 16,172 points. Once this is done, we have another resistance in the form of an upward gap made on 30th May to take care of. This gap was made when the markets opened with a big gap on Monday in that week. The levels to be countered are 54,936-55,466 on BSE and 16,370-16,506 on NSE.

On the support side, we have immediate support at 53,450-53,550 and 15,800-15,850 respectively. This would be followed by levels of 52,700-52,850 and 15,500 and 15,550 levels. The market would need solid strength to surmount the gap which was crossed and then failed the first time. While we are almost there, two days of sustaining at these levels would be enough. 

The strategy for the week would be to avoid overnight short positions as markets have the uncanny habit of opening with sharp gaps. Trade long and it might be a good strategy to look at midcap stocks which have results coming up. Pick those stocks which have shown improved performance over the last couple of quarters as we return to normalcy post covid.

Markets behaved on expected lines in the previous week. They gained on four of the five days in the trading week. During the rise through the week, markets filled the gap of 13th June quite comfortably. It could now be said that the immediate short-term trend of the markets is upward and we would see markets gaining further from hereon. BSESENSEX gained 1,573.91 points or 2.97% to close at 54,481.84 points while NIFTY gained 468.55 points or 2.97% to close at 16,220.60 points. The broader markets saw BSE100, BSE200 and BSE500 gain 3.22%, 3.25% and 3.25% respectively. BSEMIDCAP gained 3.64% while BSESMALLCAP was up 3.36%. 

The Indian Rupee was under pressure against the US Dollar and lost 21 paisa or 0.27% to close at Rs 79.25. The performance of the Rupee against other currencies has been more positive and it is actually stronger compared to most of them.  

NTPC has commercialised the largest floating solar PV plant at Ramagundam reservoir in Telangana. The project is of 100MW and the successful launch of this would see many more projects going live in the times to come. The advantage of floating projects is two-fold where one there is no cost or issues of land acquisition and secondly, they help in conservation of water as evaporation reduces significantly. 

Result season for the quarter April to June has begun with TCS being one of the first amongst the large companies to declare results. While revenues were on expected lines, the profits were under pressure due to higher manpower costs. These were on account of attrition which has been high. Further there has been a significant increase in travel costs as businesses return to in-person meetings compared to zoom calls. One would like to see when other companies like Infosys and Wipro declare their results whether this was unique to TCS or experienced by all the players. 

Rains or monsoon has covered a large part of the country and it is encouraging as of now. While we have experienced floods in Assam, this is something which happens more often than not in that part of India. Going forward the advancement of the same in the entire country will help in reigning inflation and price rise to a great extent. 

The markets in the week gone by had their rallies almost all through the period. It was only on Tuesday where they gave a scare with markets opening gap up, gaining further and then not only giving up the gains, but closing in the red. One could be sure that at that point of time it would have given goosebumps to a number of people. Anyway Wednesday, onwards the market took things under control and added gains on every day thereafter. 

FPI activity seems to have reduced with selling seeing to have been much lower than earlier. They were sellers on Monday but were buyers on Tuesday. On the remaining three days though sellers, it was in triple digit only. The net figure for five days of trading was Rs 2,218 crs which in the month of June averaged a daily sale of Rs 2,600 crs plus. 

Coming to the week ahead, one should expect markets to build on the momentum made in the previous week and gain further ground. While the gap of 13th June has been taken care of, we now have an upward gap made on 30th May to take care of. This gap was made when the markets opened with a big gap on Monday. The levels to be countered are 54,936-55,466 on BSE and 16,370-16,506 on NSE. The gap needs to be filled and markets to sustain themselves above the gaps. Once they do that the next level of resistance would be at 56,350-56,450 on BSESENSEX and 16,750-16,800 on NIFTY. 

On supports the first level would be top of the gap which we crossed last week at 54,205 and 16,172 points. The support would be in the range of 54,000-54,200 and 16,100-16,172. This would be followed by 53,650-53,850 and 15,800-15,850 respectively. 

While the trend and momentum are in favour of the bulls, one must remember that the results season has started and the announcement could lead to individual shares and then their sectors getting impacted. The strategy for the week would be to play for the markets gaining further ground and moving up. A note of caution would be that while there would be rallies, it would not be a one way street and markets would have their customary bouts of gains and losses happening. 

Trade cautiously with a positive bias.