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Weekly Report: 10th September 2024

Weekly Trend Report

Week Gone By

Domestic equity indices witnessed modest losses during the week, snapping a three-week rising streak. The Nifty slipped 383.75 points to at 24,852.15. The broader market continued to stage outperformance for yet another week. Meanwhile, HSBC India’s PMI for August was 57.5, down from July but above its long-term average. On the global front, China’s Caixin PMI fell to a six-month low of 49.1. South Korea’s headline inflation eased to 2%, its lowest since March 2021, while Japan’s household spending showed a modest 0.1% increase in real terms compared to the previous year. In the US, manufacturing continued to contract with the ISM PMI at 47.2, and job openings fell to 7.67 million, the lowest since early 2021, highlighting potential challenges for the economy.

Week Ahead

Investors will closely monitor both foreign and domestic institutional activities, along with rupee’s movement against the dollar and crude oil prices, to gauge market sentiment. Key upcoming events include India’s industrial production and consumer inflation data, both releasing on 12 September 2024. China’s inflation data will be out on 9 September 2024, and the US will release August inflation and producer price data on 11 and 12 September 2024, respectively. Additionally, the University of Michigan consumer sentiment data for September will be available on 13 September 2024.

Technical Overview

The benchmark index commenced the trading week on a positive note and scaled to life highs of 25333 and marked an intermediate top for the week. The index succumbed to selling pressure on Monday itself and trended lower throughout the week.
Notably on Friday the index was observed to be losing its selling momentum as the session progressed into its second half. The index closed the week with a cut of 383 points.
In the interim it breached the psychological support of 25000 and takes immediate support at its 20 day MA currently trading near 24821.
The VIX increased 13.6% during the week and the pessimism is anticipated to augment on crossing the readings of 16.
The week saw most sectorial and thematic indices closing with their uptrends under pressure and the momentum further deteriorating.
On the market breadth front, the populace of stocks trading above their 50 and 200 daily MA continue to trade above the 50% threshold which is a positive sign.
However, those trading above their 10 and 20 daily MA were observed to be retracing below the 50% threshold. This indicates the intermediate momentum are observing mild pressure.
The momentum market breadth remained positive throughout the week before the markets witnessed a deeper cut on the Friday.
The 5 day ratio of the momentum market breadth continues to trail above the threshold limit, which is a positive sign.
The market breadth volume remained dried throughout the week indicating the continuation of the theme of selective stock participation.
On the technical front, the supports are now dragged lower to 24750 and 24600. It will be crucial that the index continues to sustain above this zone to limit the further drawdowns.
The swing confidence remains low which means the portfolios must take minimum permissible risk and have a prudent stock specific approach for the coming week.

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Weekly Report: 02nd September 2024

Weekly Trend Report

Week Gone By

During the week, India’s benchmark equity indices experienced a second consecutive week of losses due to global and domestic macroeconomic factors. Domestic shares tanked during the week, mirroring a global rout sparked by fears of a US recession. Worries over slowing economic growth, fuelled by weak US jobs data, sent market shockwaves. Additionally, the RBI decided to keep the repo rate unchanged at its August MPC meeting, reflecting India’s robust growth despite uncertainties in weather, geopolitics, and AI-driven tech disruptions. The benchmark was lower for three of five trading sessions: the BSE Mid-Cap index and BSE Small-Cap index skid. The Nifty settled below the 24,400 level. Sensex fails to hold 80,000 level. We expect volatility to continue in the near term amid persistent concerns over Middle East tensions, fears of a probable recession in the US and after-effects of the Yen carry trade unwinding.

Week Ahead

During the upcoming week, The ongoing June ’24 quarter earnings season will remain the centrepiece. Global cues and FII/DII flows will influence market direction. Inflation numbers in the US would be on investor’s radar. On Tuesday, the 13th of August, the producer price inflation will be released, and Consumer price inflation numbers will be announced on Wednesday. In Asia, Japan’s GDP numbers are scheduled for release on Thursday. On the same day, China’s industrial production figures would be announced. The latest reading marked the second straight month of moderation in industrial output, with growth hitting its lowest since March, mainly due to a slowdown in manufacturing activity as economic recovery stayed fragile.

Technical Overview

At the outset of the trading week, the stock index experienced continued selling pressure, aligned with global market conditions.
However, as the week progressed, the index exhibited signs of stabilization, with the 50-day moving average serving as immediate support.
Throughout the week, the index oscillated within the trading range established on Monday, demonstrating improved stock participation. By the end of the week, the index surpassed this range, albeit concluding without a definitive bias.
Concurrently, the Volatility Index (VIX) declined by 33% from its weekly peak, signaling a reduction in market pessimism.
The majority of thematic and broader indices concluded the week with upward momentum under pressure, barring sectors like consumption, FMCG, Pharma, Energy, and Oil and Gas, which exhibited confirmed upward trends. Notably, the Media index also displayed considerable improvement in its trend.
In terms of market breadth, stocks trading above their respective 10-day and 20-day moving averages rebounded from oversold levels, yet remained below the 50% threshold.
Conversely, stocks trading above their 50 and 200-day moving average notably continued to maintain levels above the 50% threshold, indicating a positive trend.
This suggests that the primary stock trend remains intact while the intermediate trend displays initial signs of improvement.
Although momentum breadth faltered at the beginning of the week, a modest recovery ensued, resulting in an improvement in the 5-day ratio.
From a technical perspective, the 50-day moving average, serving as institutional support, implies a potential pullback. However, confirmation of this requires a follow-through in price action, potentially classifying the recent sell-off as a transient event.
Validation of a pullback necessitates a decisive close above 24720. In such circumstances, it is prudent to adopt a stock-specific approach with stringent risk management, or alternatively, await further confirmation while retaining market positioning.

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Weekly Report: 26th August 2024

Weekly Trend Report

Week Gone By

Domestic equity indices continued their upward trajectory for the second consecutive week. The Nifty settled above the 24,800 level. The broader market outperformed the benchmark indices during the week. Meanwhile, India’s foreign exchange reserves declined $4.8 billion to $670.119 billion for the week ended. In August, India’s Services PMI Business Activity Index slightly rose to 60.4, while the Composite PMI Output Index decreased to 60.5. On the global front, China’s lending rates stayed unchanged, Japan’s stock market gained on strong services data, and Japanese core CPI rose 2.7% YoY. The Fed’s meeting minutes suggested a September rate cut, but concerns over a revised U.S. payrolls data and a potential recession tempered optimism.

Week Ahead

Investors will watch institutional activities and crude oil prices for market sentiment, focusing on potential interest rate cuts. Key events include India’s Q2 GDP and infrastructure output data, both releasing on August 30, 2024, with the economy having grown 7.8% in Q1 and infrastructure output rising 4% YoY in June. US durable goods orders for July will be released on 26 August 2024, following a 6.6% drop in June. Japan’s consumer confidence data for August will be released on 30 August 2024, after rising to 36.7 in July.

Technical Overview

The 50 index opened the trading week positively and experienced upward movement throughout the week, indicating a gradual recovery of bullish momentum following initial selling pressure at the start of the month.
The week concluded with a 282-point increase compared to the previous week, and the VIX decreased by 5.9%, signaling reduced pessimism. While broader and thematic indices are facing some pressure on their respective uptrends, they are displaying positive and improving momentum, which is considered a favorable sign.
In terms of market breadth, the number of stocks trading above their 10- and 20-day moving averages has consistently remained above the median level after reversing from oversold conditions, leading to a significant improvement in the 5-day momentum breadth ratio and indicating a recovery in momentum strength.
Additionally, stocks trading above their 50- and 200-day moving averages continue to trend above median levels, reflecting positively on the market. However, lower market breadth volume implies selective stock participation and a lack of broad stock involvement.
From a price action perspective, immediate support lies near a specified level, and maintaining levels above another specified point is deemed crucial.
On the other hand, a specific zone is expected to act as immediate resistance, and a decisive reclamation of this zone is anticipated to sustain bullish momentum.
Overall swing confidence is currently high, suggesting a stock-specific approach and slightly increased risk tolerance, although still within acceptable limits.

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Weekly Report: 19th August 2024

Weekly Trend Report

Week Gone By

The stock indices experienced modest gains over the shortened week, breaking a two-week losing trend. The Sensex ended above 80,400, while the Nifty finished above 24,500. This recovery was driven by positive investor sentiment and selective buying in key sectors. Despite some volatility, the overall market trend was upward, reflecting renewed confidence among investors. The week also saw the release of important economic indicators, including the CPI at 3.54%, the WPI at 2.04%, as well as data on the trade deficit and IIP. For the past week, global markets experienced some notable gains on account of allayed fear of recession in the largest world economy driven by positive economic signals and overall stability in the market.

Week Ahead

With the Q1 earnings season concluding, investor’s attention will now be directed towards global developments. Market sentiment will continue to be influenced by the activities of institutional investors, including FIIs and DIIs. The overall market participants will now follow on the upcoming week’s economic data release , which will offer further clarity on the global economic scenario. Jerome Powell’s speech next week will be key to have a better outlook on the future market sentiments.

Technical Overview

The 50 index opened the abbreviated trading week with subdued activity, remaining within a narrow 2% range and finding immediate support at 50 DMA, also known as institutional support.
However, on Friday, the index exhibited a strong breakout from a two-week consolidation phase.
Despite the sideways price action, the VIX experienced a 6% decrease during the week.
Major broad and sectoral indices closed the week with their uptrend under pressure, although the negative momentum displayed signs of improvement, indicating a positive trend.
The percentage of stocks trading above their 10- and 20-day moving averages attempted a reversal from the oversold territory, yet they continue to trade below the 50% threshold.
Additionally, the percentage of stocks trading above their 50 DMA has dropped below median levels.
On the momentum breadth front, stock participation remained subdued, with some relief observed on the final day of the week.
This was also evidenced by the lack of market breadth volume, signaling lower stock participation.
It is essential for the markets to observe follow-through to validate the potential commencement of a pullback.
From a technical perspective, it is crucial to safeguard the 50 DMA currently trading near 24100 on a closing basis, as breaching below the average line will invite further selling pressure

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Weekly Report: 12th August 2024

Weekly Trend Report

Week Gone By

During the week, India’s benchmark equity indices experienced a second consecutive week of losses due to global and domestic macroeconomic factors. Domestic shares tanked during the week, mirroring a global rout sparked by fears of a US recession. Worries over slowing economic growth, fuelled by weak US jobs data, sent market shockwaves. Additionally, the RBI decided to keep the repo rate unchanged at its August MPC meeting, reflecting India’s robust growth despite uncertainties in weather, geopolitics, and AI-driven tech disruptions. The benchmark was lower for three of five trading sessions: the BSE Mid-Cap index and BSE Small-Cap index skid. The Nifty settled below the 24,400 level. Sensex fails to hold 80,000 level. We expect volatility to continue in the near term amid persistent concerns over Middle East tensions, fears of a probable recession in the US and after-effects of the Yen carry trade unwinding.

Week Ahead

During the upcoming week, The ongoing June ’24 quarter earnings season will remain the centrepiece. Global cues and FII/DII flows will influence market direction. Inflation numbers in the US would be on investor’s radar. On Tuesday, the 13th of August, the producer price inflation will be released, and Consumer price inflation numbers will be announced on Wednesday. In Asia, Japan’s GDP numbers are scheduled for release on Thursday. On the same day, China’s industrial production figures would be announced. The latest reading marked the second straight month of moderation in industrial output, with growth hitting its lowest since March, mainly due to a slowdown in manufacturing activity as economic recovery stayed fragile.

Technical Overview

At the outset of the trading week, the stock index experienced continued selling pressure, aligned with global market conditions.
However, as the week progressed, the index exhibited signs of stabilization, with the 50-day moving average serving as immediate support.
Throughout the week, the index oscillated within the trading range established on Monday, demonstrating improved stock participation. By the end of the week, the index surpassed this range, albeit concluding without a definitive bias.
Concurrently, the Volatility Index (VIX) declined by 33% from its weekly peak, signaling a reduction in market pessimism.
The majority of thematic and broader indices concluded the week with upward momentum under pressure, barring sectors like consumption, FMCG, Pharma, Energy, and Oil and Gas, which exhibited confirmed upward trends. Notably, the Media index also displayed considerable improvement in its trend.
In terms of market breadth, stocks trading above their respective 10-day and 20-day moving averages rebounded from oversold levels, yet remained below the 50% threshold.
Conversely, stocks trading above their 50 and 200-day moving average notably continued to maintain levels above the 50% threshold, indicating a positive trend.
This suggests that the primary stock trend remains intact while the intermediate trend displays initial signs of improvement.
Although momentum breadth faltered at the beginning of the week, a modest recovery ensued, resulting in an improvement in the 5-day ratio.
From a technical perspective, the 50-day moving average, serving as institutional support, implies a potential pullback. However, confirmation of this requires a follow-through in price action, potentially classifying the recent sell-off as a transient event.
Validation of a pullback necessitates a decisive close above 24720. In such circumstances, it is prudent to adopt a stock-specific approach with stringent risk management, or alternatively, await further confirmation while retaining market positioning

To view the detailed report click here to Download

Weekly Report: 05th August 2024

Weekly Trend Report

Week Gone By

During the week, key equity barometers ended the week lower after Friday’s market correction, breaking an eight-week gaining streak. The Nifty 50 settled above 24,750 levels. In the week ending on Friday the S&P BSE Sensex fell 350.77 points to settle at 80,981.95 while the Nifty 50 index declined 117.15 points to settle at 24,717.70. The BSE Midcap index declined 0.07% to 47,675.23 whereas BSE Smallcap jumped 0.62% to close at 54,629.29. During the week the Finance Minister presented the fiscal deficit target at 4.9%. The Bank of Japan has raised its policy rate to 0.25% and plans to cut its bond-buying program by 400 billion yen per quarter, reducing monthly purchases of Japanese Government Bonds to 3 trillion yen from January to March 2026, while China’s manufacturing sector contracted for the third consecutive month in July, with the PMI falling to 49.4 due to ongoing weak domestic demand despite government support.

Week Ahead

During the upcoming week The Reserve Bank of India will announce its interest rate decision on August 8, 2024, after keeping the repo rate at 6.5% for eight straight meetings amid ongoing inflation and a resilient economy. Globally, China will release its July balance of trade data on August 8, 2024, following a June trade surplus surge to $99.05 billion, and its July inflation data on August 9, 2024, with the annual inflation rate edging down to 0.2% in June from 0.3% previously.

Technical Overview

At the outset of the trading week, the 50 index exhibited subdued activity and approached the psychologically significant 25000 level, yet ultimately yielded to corrective pressure.
Consequently, a narrow trading range persisted, reflecting the absence of a discernible trend in the initial half of the week.
Notably, the Nifty50 index registered a close below the prior day’s low for the first time in the last 41 trading sessions, albeit on relatively lower volume, thereby evading a distribution day despite a 293-point decline in closing.
While most broader and sectoral indices sustained a confirmed uptrend, exceptions were observed in the Smallcap, Nifty50, Metal, Realty, and PSU indices, which traded with their respective uptrends under pressure.
It is worth noting that the number of stocks trading above their 10-day moving average surpassed the 50% threshold, before receding marginally below the bullish zone, while those trading above their 20-day moving average maintained their position within the bullish zone.
Additionally, stocks trading above their 200-day moving average consistently upheld a level above the 80% threshold for two consecutive weeks, indicating potential for strengthened stock participation in supporting the market’s uptrend.
Although the momentum breadth remained positive but mild, a negative slope in its 5-day ratio during the latter part of the week alluded to insufficient stock participation. A potential enhancement in momentum breadth in the upcoming week could serve to confirm bullish strength in the market.
The swing confidence level persists at 25, signifying that the portfolio is capable of withstanding only the minimum permissible open risk at this time. The stocks that hold well during market corrections will be the first ones to breakout to new highs when the momentum returns.
From a technical perspective, it is evident that the 25000 level has evolved into an intermediate top for the markets, with the absence of a pronounced upside trend unless this level is convincingly surpassed.
The trading range is forecast to widen in the coming days, with the 25000-25100 range projected to act as immediate overhead resistance, while the levels of 24500 and 24200 are expected to serve as support levels.

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Weekly Report: 29th July 2024

Weekly Trend Report

Week Gone By

During the week, key equity barometers witnessed decent gains with broader market outperforming the frontline indices. The Nifty 50 settled above 24,800 levels. In the week ending on Friday the S&P BSE Sensex rose 787 points to settle at 81,332.72 while the Nifty 50index gained 303.95 points to settle at 24,834.85. The BSE Midcap and Smallcap index jumped 3.13% and 3.45% to close at 47,706.67 and 54294.35 respectively. During the week the Finance Minister presented the Union Budget for 2024-2025 focusing on employment, skilling, MSMEs and middle class. The HSBC Flash Composite index climbed to 61.4 and Manufacturing index climbed to 58.5 from 60.9 and 58.3 respectively from the previous month. Also, the economic survey projected a real GDP growth rate of 6.5-7% for 2024-25.

Week Ahead

During the upcoming week India’s infrastructure output for June will be declared on 31st July 2024 and India’s manufacturing PMI for July will be released on 1st August 2024. Globally, the US JOLTs Job openings for June will be released on 30th July 2024 and the US Fed Interest Rate decision will be held on 31st July 2024. China will release manufacturing PMI data for July on 31st July 2024 and the Bank of Japan’s interest rate decision is on 31st July 2024.

Technical Overview

The benchmark index began the trading week quietly before the Union budget day. High volatility marked the event day, with Nifty dropping 500 points from the day’s peak, then recovering nearly 400 points in the second half. It hit a crucial low of 24074, making it an important level. As the week progressed, the volatility settled, and the index experienced a strong pullback to reach highs of 24861, closing the week in the upper quartile of the trading range.
The trading session on Friday marked the 36th session following the Union Election. The significance of this uptrend lies in the fact that the price action has consistently defended its prior day’s low on a closing basis, indicating strength and momentum in the ongoing trend.
Throughout the week, the VIX experienced a 17% decline, signifying diminished pessimism regarding future outlooks, thus presenting a favorable indication.
The majority of broad indices are currently trading in a confirmed uptrend with positive momentum. However, Smallcap and Nifty Next 50 are displaying some pressure at the top.
Most sectoral indices are currently exhibiting a confirmed uptrend with positive momentum, except for the Media index. Nonetheless, the Media index has shown improved momentum, presenting a favourable indication.
In assessing market breadth, it has been observed that the number of stocks trading above their 10 and 20-day moving averages is showing initial indications of reversing from oversold levels and is presently positioned above the 50% threshold. This suggests a strengthening of their intermediate trend, which is a positive signal.
Furthermore, the number of stocks trading above their 50 and 200-day moving averages remains significantly above their 50% and 70% thresholds, indicating robustness in their primary trends.
The momentum breadth has significantly improved during the week. However, when compared to market breadth volume, it suggests that stock participation has seen improvement, albeit more selectively. Wider participation can further bolster the ongoing uptrend.
From a technical standpoint, it is imperative to note that the level of 24075 serves as a critical pivotal support. Sustaining above this level will pave the way for the index to strengthen its bullish momentum. Furthermore, a robust weekly conclusion indicates the potential for the uptrend to extend towards the level of 25000 and 25300.

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Weekly Report: 22nd July 2024

Weekly Trend Report

Week Gone By

Domestic equity indices ended the truncated week with limited gains, rising for the seventh consecutive week. On a weekly basis, the broader market underperformed the frontline indices. With the Nifty index settling above 24,500 level, participants will keep all their eyes on the upcoming budget announcement scheduled for 23rd July which could further provide direction to the market. India’s Wholesale Price Index (WPI) – based inflation for the June month accelerated to a 16 month high of 3.36%. On the Global front, China’s economic growth fell short of expectations in the 2nd quarter, dampening sentiments. Its GDP expanded by 4.7% YoY compared to its previous quarter growth of 5.3%. The European Central Bank also kept the kept the interest rates unchanged and announced that it would hold interest rates steady for now.

Week Ahead

Market participants focus would be on the development with regard to the Union Budget. Additionally, Q1FY25 earnings report, domestic and global economic data, broader global market trends, crude oil prices will further influence the market trajectory. Key highlight for the coming week would be the Union Budget on July 23rd. HSBC India PMI data will also be released this week. Market participants will also look forward for the US Q2 GDP data which will be released on 25th July. US core PCE price data will also be released on 26th July.

Technical Overview

The Nifty 50 index started the week with a muted performance but experienced a positive trend until Friday.
On the last trading day, the index hit record highs of 24854, but then faced intense selling pressure and closed 323 points lower from the life highs. This led to the index giving up all its weekly gains and closing nearly flat, with a relatively lower volume.
The spike in volatility ahead of the upcoming budget was observed, as the VIX showed an 8% increase on a weekly closing basis, with early signs of further rise.
Despite a weak market and decreasing momentum breadth in the last two trading sessions, the index still managed to close above the prior day’s low and above the 10-day EMA, indicating strength in the intermediate trend.
As of Friday’s closing, most broader and sectorial indices remained in a confirmed uptrend, although the positive momentum showed early signs of fading.
Regarding market breadth, the number of stocks trading above their respective 10 and 20 daily MA dipped below the 50% threshold into the bearish zone, while those above the 10 daily MA reached oversold values.
However, the more significant trend remained intact with stocks trading above their 50 and 200 daily MA in the bullish zone.
The momentum breadth indicated a negative trend, accompanied by declining volumes, suggesting weaker stock participation and selective movements. Despite significant sell-offs in price action, the impact was not as severe in the stocks, which is a positive sign.
As we move into the budget week, some volatility is expected to persist.
At this point, the swing confidence remains low, meaning that portfolios must take a minimum permissible open risk and prudently remain invested in sectors or themes that continue to show resilience to drawdowns.

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Weekly Report: 15th July 2024

Weekly Trend Report

Week Gone By

Domestic equity indices continued their upward trajectory for the sixth consecutive week. The Nifty settled a tad above the 24,500 level. The broader market edged higher in two out of five trading sessions during this week. Meanwhile, India’s foreign exchange reserves surged to a record high of $657 billion the week following its inclusion of bonds in the JP Morgan Emerging Market Index. On the global front, Chinese consumer inflation declined amidst economic concerns, limiting spending, while producer inflation continued its 20th consecutive month of contraction, albeit at a slower pace. Consumer price index inflation grew by 0.2% year-on-year in June, down from 0.3% in the previous month. Additionally, in the US, the economy added 206,000 new nonfarm jobs in June, surpassing economists’ forecasts. However, the unemployment rate unexpectedly rose slightly to 4.1%.

Week Ahead

Both foreign and domestic institutional investor activity will be tracked alongside crude oil prices to gauge overall market sentiment. India’s Union Budget in July is a key event, with hopes pinned on growth-oriented policies. The Q1 FY25 earnings season also begins this month, adding another layer of influence. India’s Industrial production data for May and inflation rate June will be released on 12th July 2024. China’s inflation data will also be released on 10th July 2024.

Technical Overview

The benchmark index started the trading week with little change and remained within a narrow range of 320 points. The 5-day exponential moving average provided immediate support.
On Friday, after a period of reduced volatility, the price broke above the weekly trading range, reaching highs of 24592 and closing above the psychological mark of 24500.
This led to a strong follow-through in price action after surpassing the weekly Bollinger band, marking the 6th week of higher highs. The VIX closed 8.1% higher for the week, but its upside was limited by the shorter-term weekly moving averages.
The RSI for both daily and higher timeframes continued to indicate overbought conditions without any divergence from the price, demonstrating momentum in the price trend.
The week concluded with broader indices and major sectors showing a confirmed uptrend, with the media sector displaying strength as it attempted to rally with positive and improving momentum.
The number of stocks trading above their 10- and 20-day daily moving averages decreased from the overbought levels seen earlier, but those trading above 50 and 200 DMA continued to remain above the 50% threshold, which is a positive sign.
However, on the momentum breadth front, the market breadth volume remained modestly positive, indicating selective accumulation and movement among weaker stock participation. This emphasizes the importance of cautiously initiating fresh long entries.
Currently, from a technical standpoint, the index is receiving immediate support at its 5 and 10-day moving averages, which demonstrates momentum in the trend. However, it is important to exercise caution if the index breaches below the average line.
Nifty is expected to remain in a broad range. On the derivatives front, there was an increase in open interest for the 25000CE strikes, indicating a strong resistance zone. A breach below the support of 24000 could potentially lead to further selling pressure.

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Weekly Report: 08 th July 2024

Weekly Trend Report

Week Gone By

The key equity benchmarks witnessed substantial gains during the week, rising for the second week in a row. The Nifty settled above the 24,300 level. The broader market outperformed the frontline indices during the period under review. The India Manufacturing Purchasing Managers’ Index (PMI) increased to 58.3 in June from 57.5 in May, thus indicating a sharper improvement in business conditions. Meanwhile, India’s foreign exchange reserves rose by $816 million to $653.71 billion in the week ending June 21st, reversing a decline from the previous week. On the global front, China’s Caixin Services PMI for June came in at 51.2, down from 54.0 in May. While still indicating expansion, the pace of growth has weakened. Additionally, US commerce department reported that US inflation in May slowed to its lowest annual rate in over three years.

Week Ahead

Both foreign and domestic institutional investor activity will be tracked alongside crude oil prices to gauge overall market sentiment. India’s Union Budget in July is a key event, with hopes pinned on growth-oriented policies. The Q1 FY25 earnings season also begins this month, adding another layer of influence. India’s Industrial production data for May and inflation rate June will be released on 12th July 2024. China’s inflation data will also be released on 10th July 2024.

Technical Overview

The benchmark index continued its upward movement for the fifth consecutive week and ended the week 313 points higher than the previous week’s closing.
However, compared to the week before last, the trading range narrowed to 408 points from the previous 824 points, with VIX cooling off by 8%.
Most indices traded in a confirmed uptrend with positive momentum, with Media being the exception, showing significant improvement amidst the downtrend.
Stocks with a 10-day moving average (MA) are nearing the overbought territory.
It will be crucial to take new swing positions prudently as the overall weekly swing temperature is getting slightly warmer.
However, stocks trading above their 50- and 200-day MAs are well above their 50% threshold, indicating a positive primary trend.
The momentum market breadth remained strongly positive throughout the week, with an improvement in market breadth volume compared to the previous week. This suggests broader participation and decent accumulation.
The recent sectorial observation also indicates strength in the market.
On the technical front, the price action on the weekly outlook showed follow-through after surfacing above the Bollinger upper band, with the RSI trading above 74 levels without showing any divergence against the price.
Derivative front observations indicate consistent call addition at 24500 strike levels, making those areas strong resistance zones.
A decisive close above a 24500 will allow the price action to continue its momentum on the upside.
On the flip side, immediate support comes in the zone of 24100-24000, and sustenance above this zone will allow the index to garner further bullish strength.

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