Nifty tips 5900; pares gains on weak global cues

iifl5th July, 2013 : Comments by Amar Ambani, Head of Research, India Infoline 

The Indian equity market managed to build on Thursday’s gains extending its winning streak to the second consecutive day. The Nifty closed above 5,850 while the Sensex shut shop above the 19,400 mark, a gain of 0.5% each. The Nifty briefly touched the 5,900 mark but profit booking and weak European cues pulled it down. For the week too, the gains have been muted around 0.5% each.

Positive Asian market cues at the start of trade lifted benchmark indices. However, in afternoon trade, the Sensex shed its gains of over 150 points from the day’s high as the Indian rupee continued its slide against the dollar. Erasing all its initial gains, the rupee weakened further to 60.45 against the greenback.

Among sectoral indices, oil and gas, FMCG, metals, capital goods, banking and healthcare stocks gained. Even mid- and small-cap stocks ended with modest gains. On the other hand, the losers pack included telecom, IT and auto stocks.

In stock-specific action, IDFC, JP Associates, Jindal Steel, NMDC, Asian Paints, Bank of Baroda, ONGC, BHEL, Reliance Industries and HDFC Bank gained while GAIL India, Bharti Airtel, Lupin, ICICI Bank, M&M, Hero MotoCorp, HCL Technologies, Coal India and DLF lost out.

The advance-decline ratio marginally favoured the bulls. On the Bombay Stock Exchange, 1,201 stocks advanced against 1,125 declines, while 144 stocks remained unchanged.

Volatility, as measured by India VIX, edged higher by 0.5% to close at 18.67. It hit a day’s high of 19.01 and low of 17.75.

So, how will markets trade next week given the intense volatility? Amar Ambani, Head of Research at IIFL, sees strong resistance for the Nifty at 5,900 levels. “5900 seems to be a crucial inflexion point which might decide the further course in this rangebound market.”