Sensex Down 27 Points, Nifty at 24,316; Nifty Prediction for Tomorrow

Nifty Prediction for Tomorrow

Market Recap & Outlook: Flat Close Masks Volatile Session, Nifty at 24,316

Monday’s Momentum Fizzles: A Tale of Two Halves

The Indian equity market failed to sustain the momentum witnessed earlier this week, ending Tuesday, July 11th, in a flat yet volatile trading session. Both the Sensex and Nifty closed with marginal changes, masking a day filled with dramatic swings.

The Sensex settled 27.43 points lower (0.03%) at 79,897.34, while the Nifty ended down a mere 8.50 points (0.03%) at 24,316.00.

This flat headline, however, doesn’t capture the underlying story of indecisiveness and cautious optimism that played out throughout the day.

A Market Divided: Winners, Losers, and Sidelines

Delving deeper, the session revealed a near-even split between advancing and declining stocks. Roughly 1966 stocks managed to gain ground, while 1427 witnessed a decline.

The remaining 89 stocks remained unchanged. This balanced performance reflects a lack of clear direction in the market, with investors seemingly waiting for a decisive signal before making significant moves.

Sectoral performance also mirrored this mixed sentiment. The realty and pharma indices bore the brunt of the selling pressure, falling 1.5% and 0.6% respectively.

This suggests lingering concerns within these sectors, potentially related to recent news or policy changes. However, the media and oil & gas sectors emerged as bright spots, each registering a gain of 1%.

This positive movement could be attributed to specific company announcements or sector-specific tailwinds.

Nifty & Bank Nifty: A Closer Look

The Nifty’s performance was a microcosm of the broader market’s volatility. The index opened on a positive note but quickly succumbed to selling pressure, experiencing a sharp decline in the mid-session.

However, a wave of buying activity emerged in the latter half, helping the Nifty recoup some of its losses and close marginally lower. This rollercoaster ride highlights the ongoing tug-of-war between bullish and bearish forces in the market.

Analysts at Sharekhan believe there’s a strong support base for the Nifty in the 24,150 – 24,100 zone. Their observations indicate that buying activity tends to pick up whenever the index approaches this lower level.

This technical analysis suggests a potential buying opportunity for investors with a short-term investment horizon and a tolerance for volatility.

The Bank Nifty mirrored the Nifty’s volatility, exhibiting a corrective move towards its support zone of 52,000 – 51,900 during the intraday session. Unlike the Nifty, however, the Bank Nifty managed to end the day with a gain of 81 points.

This positive turnaround could be attributed to “put writing” activity, a strategy employed by options traders that indicates a bullish outlook for the index in the near term.

Analysts at Progressive Shares offer a sentiment-driven perspective. They believe that as long as the Nifty remains above the crucial level of 24,200, the overall bullish trend for the Indian market can be considered intact.

They also identify 24,460 as a significant resistance level for the Nifty in the immediate future. A breakout above this level could signal a potential upward trend.

Navigating the Week Ahead: What to Watch

Looking towards the rest of the week, analysts predict continued rangebound movement for both the Nifty and Bank Nifty. This implies that the indices might fluctuate within a specific price range rather than experiencing significant upward or downward trends.

For the Nifty, the support zone of 24,150 – 24,100 remains a crucial level to watch. If the Nifty falls towards this zone, it could present a buying opportunity for investors anticipating a rebound.

Conversely, a break above the resistance level of 24,460 could signal a potential breakout and a continuation of the upward trend.

Similarly, Bank Nifty is also expected to continue its rangebound movement with a bullish bias. The support zone of 52,000 – 51,900 takes center stage.

A break below this support could lead to further weakness, while holding above it opens the possibility of a move towards 53,500 – 52,000.

Several key factors will likely influence market direction in the coming days:

• Corporate Earnings Season: The curtain rises on the first quarter of FY25 earnings season this week. Major companies are scheduled to report their financial results, and investor reactions to these reports could significantly impact specific sectors and the overall market sentiment. A string of positive earnings reports could boost investor confidence and trigger a rally, while disappointing results could lead to profit-taking or even trigger a sell-off, particularly in sectors with a high concentration of underperforming companies. This highlights the importance of following company-specific earnings guidance and analyzing individual financial statements to make informed investment decisions.

• Global Cues: International markets, particularly the US market, will continue to be on the radar. News or events impacting global economic growth, inflation, or geopolitical tensions will likely have a ripple effect on the Indian market. A strong performance in the US market could buoy investor sentiment in India, while signs of a slowdown or recession could trigger risk aversion and lead to selling pressure in the domestic market.

• Federal Reserve Chair Testimony: Jerome Powell, the Chairman of the US Federal Reserve, is set to deliver his testimony before the US Congress on July 12th. His comments regarding monetary policy, particularly any indications of future interest rate hikes or quantitative tightening measures, will be closely scrutinized by investors worldwide. A hawkish stance from the Fed could strengthen the US dollar and potentially lead to capital outflows from emerging markets like India. Conversely, a dovish stance could improve risk appetite and encourage foreign investment inflows into India.

• FPI Flows: Foreign portfolio investor (FPI) activity will remain a key driver of market movements. FPIs play a significant role in providing liquidity to the Indian markets. Continued inflows from FPIs could provide a much-needed boost to the market, while outflows could create downward pressure. Market participants will be keenly watching FPI data to gauge their investment sentiment towards India.

Beyond the Headlines: Additional Considerations

While the aforementioned factors will undoubtedly influence market direction, it’s crucial to consider other relevant aspects:

• Geopolitical Developments: The ongoing Russia-Ukraine war and its implications for global energy prices and supply chains will continue to be monitored. Any escalation in the conflict or disruptions in energy supplies could trigger market volatility.

• Monsoon Progress: The progress of the monsoon season remains critical for India’s agricultural sector and overall economic growth. A timely and well-distributed monsoon is essential for a good agricultural harvest, which can boost rural demand and economic activity. Conversely, an erratic or deficient monsoon could dampen investor sentiment.

• Domestic Reforms and Policy Measures: The Indian government’s efforts to implement reforms, improve the business environment, and attract foreign investment will be closely watched. Positive policy announcements or initiatives aimed at boosting economic growth could lift investor confidence and attract capital inflows.

Final Remarks: A Week of Cautious Optimism

The Indian equity market appears to be entering a phase of cautious optimism. While near-term volatility is likely to persist, analysts predict continued rangebound movement for the Nifty and Bank Nifty.

Key events like corporate earnings announcements, global cues, and policy developments will be the major determinants of market direction in the coming days. Investors are advised to adopt a prudent approach, stay informed about these developments, and manage their portfolios accordingly.

By carefully considering these factors and maintaining a disciplined investment strategy, investors can navigate the current market environment and potentially position themselves to benefit from future opportunities.