Sensex down 53 Points, Nifty at 24,324; Nifty Prediction for Monday
Nifty Prediction for Monday
Market Recap: Resilience Shines as Nifty Rallies, Bank Nifty Falters (July 5th, 2024)
In a session marked by contrasting sectoral performances, the Indian stock market staged a remarkable comeback in the final hour today, July 5th, 2024.
Despite opening lower, the Nifty index managed to close 22 points higher at 24,324, defying initial weakness.
This resilience was further bolstered by the record highs achieved by both the midcap and smallcap indices, highlighting a broader market participation.
Sectoral Divergence: Oil & Gas Take Center Stage
The buying spree wasn’t ubiquitous, however. The banking sector witnessed selling pressure, leading the Nifty Bank index to close a significant 443 points lower at 52,660. This decline can be attributed largely to the fall in HDFC Bank’s share price.
On the flip side, the oil & gas, energy, and infrastructure sectors emerged as the darlings of the day, attracting significant buying interest. This positive momentum extended to the PSE, pharma, and FMCG indices, which also closed on a positive note.
Market Movers: Broader Participation and Defensive Play
Diving deeper into the data, a bullish sentiment becomes evident. Out of the 30 Sensex stocks, 17 managed to gain ground, indicating a broader market participation beyond the usual heavyweights.
This trend continued in the Nifty as well, with 36 out of 50 stocks witnessing positive movement. Even within the struggling Bank Nifty, 8 out of 12 stocks closed higher, demonstrating some pockets of strength.
Further analysis reveals a defensive play unfolding in the market. The Nifty witnessed heavy put writing at the 24,200 level, essentially a bet against a significant fall.
This strategy created short-term support for the index, ultimately contributing to the late-day surge. This buying spree in the final hour underscores a prevailing bullish sentiment, suggesting that this strength could persist unless the Nifty decisively breaks below the 24,200 support zone. In such a scenario, some profit booking activity might come into play.
Expert Outlook: Navigating the Range-Bound Bank Nifty
Market experts weigh in on the future trajectory for July 8th. Kunal Shah of LKP Securities highlights the volatility witnessed in the Bank Nifty, attributing its decline primarily to the fall in HDFC Bank.
He observes that the index is currently stuck in a trading range, with resistance located at 53,000-53,200.
Interestingly, call writing activity has been concentrated around this resistance level, potentially indicating a resistance test in the near future.
On the downside, support lies in the 52,300-52,100 zone. A decisive breakout on either side of this range is crucial for the index to establish a clear trend.
However, Kunal maintains a cautiously optimistic view, suggesting that a bullish bias remains within this range, and any decline could present a buying opportunity.
Rupak Dey of LKP Securities offers a Nifty-centric perspective. He points out that although the Nifty opened with a gap down, it witnessed a sharp comeback led by put writers. This heavy put writing activity at the 24,200 level has effectively created short-term support for the index.
The late-day buying spree further reinforces the prevailing bullish sentiment, which is likely to continue as long as the Nifty holds above the 24,200 mark.
Global Cues: US Non-Farm Payrolls Data in Focus
Vinod Nair of Geojit Financial Services emphasizes the mixed performance of the domestic market, highlighting the pressure faced by the banking sector.
He notes that the decline in deposits by major banks during the June quarter has raised concerns about the overall health of the banking industry. This sector-specific weakness was, however, offset by the strong performance of the midcap and smallcap segments.
On the global front, investors remain focused on the upcoming release of the US non-farm payrolls data later today.
This data point holds significant importance as it can influence market expectations regarding potential interest rate cuts by the US Federal Reserve.
Final Remarks: A Balancing Act
The Indian stock market navigated a day of contrasting sectoral performances today. While the banking sector faltered, the broader market showcased remarkable resilience, with both midcap and smallcap indices achieving record highs.
The late-day surge in the Nifty further emphasizes the underlying bullish sentiment. However, investors should remain cautious of potential profit booking activity if the Nifty falls below the crucial 24,200 support level.
The release of the US non-farm payrolls data later today will be a key factor to watch, as it could influence global market sentiment and, consequently, impact the Indian market in the coming days.
