Weekly Trend Report
- 22nd July 2024
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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