After The Bell: A volatile Friday, what should investors do on Monday?

Market Outlook

The Indian market snapped a four-day losing streak to close in the green on July 2. The Nifty, which slipped into the red managed to recoup losses, to close 42 points higher at 15,722. The Sensex gained 166 points to end at 52,484.

On the broader market front, the BSE smallcap index closed more than a percent higher, while the midcap index closed flat with a positive bias.

“Amid lack of domestic triggers, main indices traded flattish and ended with minor gains, while broad market maintained its optimism driven by mid & small caps,” Vinod Nair, Head of Research at Geojit Financial Services said.

“Domestic banking stocks gained, though RBI in its financial stability report indicates that gross NPA percentage could climb to a baseline of 9.8 percent by March 2022,” he added.

The rapid increase in Covid cases globally is having an effect on the international market, Nair said. On the global front, bourses are were awaiting the release of the US job data to take clues regarding the US Fed’s monetary policy stance, Nair said.

Sectorally, buying interest was seen in consumer durable, energy, healthcare, and telecom stocks, while selling pressure was seen in power, metals, utilities, capital goods, and oil & gas.

India VIX fell by 5.84 percent from 12.84 to 12.09. India VIX was gradually drifting lower and hovering near its lowest levels of the last 17 months. Lower volatility indicates a range-bound move but at the same time, decline can be bought.

Here’s what experts suggest investors should do on July 5:

Expert: Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services

The Nifty continued forming lower lows of the last four sessions but formed a bullish hammer candle on the daily scale, which indicates that declines are being bought.

Now, the index has to hold above 15,700 to witness an up move towards 15,850 and 15,900, while on the downside, support can be seen at 15,600 and 15,500 zones.

Expert: Rohit Singre, Senior Technical Analyst, LKP Securities

The index formed a hammer candle pattern after four consecutive bearish candles. On the weekly chart, it formed a bearish candle with loss of nearly a percent.

The index has shown some bounce from its demand zone of 15,600, which will be the support for next sessions also followed by 15550 and dips will be suggested around said levels, resistance is coming near 15,800-15,900 zone.

Expert: Gaurav Ratnaparkhi, Head, Technical Research, Sharekhan by BNP Paribas

The Nifty posted a positive daily close on July 2 after four consecutive negative sessions. The selling pressure at the beginning of the session was absorbed near 15,650-15,630 and the index bounced back thereon.

Multiple support parameters likely 61.8 percent retracement of the previous rise from 15,450 to 15,915, the daily lower Bollinger Band, the lower end of a falling channel on the hourly chart and lower end of a rising channel on the daily chart were present near 15,650-15,630 that induced the bulls into the action.

Hereon, the index is set to take a leap towards 15,900, and once that is crossed on a closing basis, the Nifty can target 16,400. On the downside, 15,650-15,630 will continue to act as a crucial support zone on a closing basis.

Manish Hathiramani, Proprietary Index Trader and Technical Analyst, Deen Dayal Investments

The markets are taking support at lower levels. The Nifty respected the 15,600-15,650 patch on July 2 and the bias remains on the upside as long as 15,400 does not break on a closing basis.

The Nifty still has the wings to achieve 16100 and hence any dip can be utilised to accumulate long.

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