Market has overcome the election result-induced volatility early this month to score handsome gains. With just one day left, the NSE Nifty50 and the BSE Sensex have gained 6.72 per cent and 7.14 per cent, respectively, so far in June, set for their best one-month gain since December 2023. The Nifty50 gained 0.74 per cent on Thursday to end at 24,044.5, topping 24,000 for the first time. The S&P BSE Sensex jumped 0.72 per cent to close above 79,000 points for the first time, lifted mainly by private bank stocks.
Rajesh Bhosale, Equity Technical Analyst, Angel One, said: “June was a remarkable series, with the contract ending with a significant upmove of around 7 per cent amidst an action-packed period.
“However, this rapid movement has pushed oscillators across major time-frames into the overbought zone. While contra-bet of shorting is not advised, it is prudent to take some profits, as a price or time-wise correction is expected in the near term,” he advised.
Gainers, laggards
The BSE Midcap gauge climbed 0.17 per cent, while the Smallcap index declined 0.57 per cent. Among the sectoral indices, power jumped 1.74 per cent followed by IT – 1.65 per cent. Financial Services, Industrials, Realty and Capital goods were the laggards.
According to Deepak Jasani, Head of Retail Research, HDFC Securities, “The upmove in the markets has been gradual so far (except for the last four days), as participants are wary of the high valuations. A decent monsoon in terms of spread and intensity could improve the prospects of growth even further while bringing down inflation. A rate cut by the US Fed over the next few months could make equity as an asset class even more attractive benefitting Indian equities by way of more inflows”.
“We do not expect any major correction in the markets ahead of the Union Budget, as participants keep discounting expectations from the Budget,” Jasani said.
F&O rollover
Shilpa Rout, AVP – Derivatives Research, Prabhudas Lilladher, said: “In the June series, all major indices reached new all-time highs. Nifty saw overall gains of 6 per cent, with current rollovers at nearly 66 per cent (pre-market close value), which is in line with the three-month average.”
The option chain indicates that 24,000 call writers were very active for the July series monthly expiry, with weekly expiry focusing on the 24,000/25,000 strikes. Put writers for the monthly expiry show support at the 23,000 strike, while the weekly expiry indicates immediate support at the 23,500 strike. Therefore, the market outlook suggests buying on dips until the 23,600 level, aiming for extended targets up to 24,300, she said.
According to Rout, Bank Nifty rollovers appear higher compared with the past three-month average; however, the recent rally has been quite aggressive. The silver lining is that heavyweight stocks such as HDFC Bank, ICICI Bank, Kotak Mahindra Bank and Axis Bank still show potential for upward movement, which could cause significant swings towards the higher range for the index.
Sectors with strong rollovers include Technology, Cement, Telecom, Financials, Banking (Private Banks) and Capital Goods. In contrast, weak rollovers are observed in Chemicals, Infrastructure, Realty and Metals.”
Jaykrishna Gandhi, Head – Business Development, Institutional Equities, Emkay Global Financial Services, said: “The move in the index and the broader markets is supported by FII flows also turning in the previous 13 trading sessions (where we have seen outflows in the previous two months), along with robust retail inflows.
“No surprises to guess that the recent move is supported by the private banking sector which has been a laggard from previous eight quarters, but an usual favourite amongst the foreign participants. We hope that the positive momentum to continue as we enter July with confidence of a reformative Budget, which will help in economic growth momentum and supported by flows from both domestic and foreign investors.”
Large-caps with better valuations and new segments tapping the capital markets will be in focus, he said.