After The Bell: Nifty back above 15,800, what should investors do on Friday?

Market Outlook

A quick turnaround for Indian markets after three days of decline pushed the Nifty50 back above 15800 on July 22. The benchmark indices rallied over 1 percent, as the Sensex rose closed 639 points higher at 52,837 and the Nifty 191 points at 15,824.

Broader markets outperformed the benchmarks. The BSE midcap index gained 1.4 percent and the smallcap index rose 1.5 percent.

“Indian markets have made a smart pull-back, supported by the positive global set-up and a decent start to the Q1FY22 earnings season. Markets are clearly rewarding the stocks/sectors where the earnings momentum is strong (such as IT – especially midcap IT, Cement, Metals) or where growth visibility remains good (such as Chemicals, Healthcare, etc.),” Milind Muchhala, Executive Director, Julius Baer, said.

“With the headline index remaining steady at elevated levels, the broader market (midcaps/smallcaps) continues to witness a lot of excitement/participation. However, it becomes critical to keep an eye on valuations, as some of the stocks have seen a very sharp re-rating,” he said.

Sectorally, buying interest was seen in metals, telecom, capital goods, and power, which rose more than 2 percent each. The FMCG index saw some profit-taking.

India VIX fell 9.96 percent from 13.20 to 11.88 levels. Declines in volatility indicate that the bulls are again in command and buying interest is seen at every meaningful decline.

On the options front, Maximum Put OI is at 15,000 followed by 15,500 strike, while maximum Call OI is at 16,000 followed by 15,800 strike. Call writing is seen at 16,000 then 16,100 strike, while Put writing is seen at 15,800 then 15,700 strike. Option data suggests a broader trading range in between 15,600 to 16,000 zones.

Here’s what experts suggest investors should do on July 23:

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

The Nifty formed a bullish candle on the daily scale and negated the lower high-lower low formation of the last two sessions.

The index has to hold above 15,800 to witness an up move towards 15,962 and 16,000, while on the downside, support exists at 15,700 and 15,600.

Vinod Nair, Head of Research at Geojit Financial Services

Taking cues from a firm global market, Indian shares saw robust momentum, shrugging off concerns over the spread of Covid-19 and FII selling.

Global markets continued to hold onto their gains owing to solid earnings reports and turned their focus on the ongoing European Central Bank’s policy announcement.

A confirmation by the Fed to continue its supportive policy in the upcoming meet despite rising inflationary pressure will be a key factor in maintaining the rally.

S Ranganathan, Head, Research, LKP Securities

The bulls came back strongly as indices rallied more than a percent. ICICI Group witnessed a renewed interest in all its three key entities and so did the QSR segment with Jubilant FoodWorks posting good numbers and the Street keenly awaiting the listing of Zomato.

Sumeet Bagadia, Executive Director, Choice Broking

On the technical front, the Nifty has formed an Open Bullish Marabozu candle, which suggests strength for the upcoming session. The index has given a close above 21 and 50-DMA, which adds further strength to the counter.

Hourly momentum indicator MACD is also showing positive crossover, which, too, indicates strength for the next day. The Nifty has support at 15,600, while resistance is at 15,950.

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