The pace of selling by FPIs have decreased this month and on 6 July, for the first time in several weeks, FPIs bought equities worth Rs 2,150 crore. “The major factors driving FPI selling during the last 2 to 3 months have been the steady appreciation of the dollar and rising interest rates in US. If the rupee consolidates at the current level, which in turn depends mainly on the price of crude, FPI selling will come down,” Dr. VK Vijayakumar, Chief Investment Strategist at
, said.
If the trade deficit continues to remain high, further depreciation of the rupee above 80 to the dollar is likely in the next 2 months. FPIs are likely to wait and watch for rupee movements before buying big in India, he said.
While the Sensex gained 1,574 points during the week, Nifty50 closed the week at 16,220.6, up by 2.97 per cent. Analysts said the market is back in safe terrain.
Opining that the Nifty has bottomed out, market expert Rishiraj Maheshwari said all negative surprises have already been factored in. “There is no fear in the market. When momentum returns, it doesn’t give you the time to buy. Nifty should be range-bound in the near term,” said Maheshwari, founder of RISCH Wealth and Family Office.
Besides the lower intensity of FII selling, healthy monsoon progress and robust macro data points like GST collection and services PMI data have turned the sentiments positive.
Nifty has, however, not gained for more than three weeks in a row since mid January 2022.
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.
“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,” he said
Vinod Nair, Head of Research at Geojit Financial services, said currently, investors are preferring value than growth stocks, resulting in selling across sectors like IT. Defensive sectors like FMCG can perform better due to strong cash flow, high governance, dividend policy and stable earnings growth, he said.
Technically, on the weekly charts, Nifty has formed a long bullish candle and has also surpassed the short-term resistance of 16,000. In the short term now, 16,000 and the 50-day SMA (Simple Moving Average would be the key support levels to watch out for, Amol Athawale, Deputy Vice President – Technical Research, Kotak Securities, said.
“The short term texture of the market is positive but slightly overbought. Hence, strong possibility of range bound activity is not ruled out in the near future. On the higher side, 16,300/54,800 and 16m450 would be the key resistance zone whereas 16,100 and 16,000 could be the sacrosanct support levels for the market,” he said.
