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With short term uptrend in place, trade with positive bias

by Arun Kejriwal (Market veteran investor and Opinion Maker)
Jul 11, 2022
With short term uptrend in place, trade with positive bias, Market, KonexioNetwork.com

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.