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Investors look to positive triggers

The market sentiment is negative amid undercurrent bearish bias; It’s better to avoid large open positions in the wake of high volatility

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The June 30-July 6 period under review was a tough period with markets going nowhere for the first four days. They were flat on expiry day, negative on Friday, positive on Monday and again negative on Tuesday. Wednesday was a good day for the markets and they notched their best gains during the period. BSE Sensex gained 721 points or 1.34 per cent to close at 53,750.97 points, while Nifty gained 190.70 points or 1.19% to close at 15,989.86 points.

Tuesday saw the markets gaining intraday and making the high for the period under review at 53,865 points and 16,025 points respectively. Profit taking and negative cues from global markets saw the gains being reversed and markets ended in the negative. Importantly, the gap of 13th June still holds and we need to make that extra push to cross the same.

Dow Jones has been quite volatile. On Tuesday for example, shortly after the open Dow was down 742 points. It recovered almost 600 points to close 129 points down. For the period under review, Dow gained a tad, up a mere 20 points or 0.07 per cent. Clearly US markets are worried about inflation and rising interest rates which may lead to recession. Too early to say what the final verdict would be.

There was plenty of economic activity with all of it happening on Friday. The government increased the import duty on gold from 7.5 per cent to 12.5 per cent. It also levied a windfall profit tax on exploration companies. This is a tax which is being levied in a number of countries as a result of the sharp increase in crude prices. At the same time, it also levied an export duty of Rs13 per litre on Diesel and Rs6 per litre on petrol and ATF. This would reduce the effective realisation made by refiners who find it easier to export than sell in the local market.

Heavyweight Reliance lost Rs185 or 7.13 per cent on Friday post the windfall tax and export duty. For the period under review Reliance lost Rs 167.15 or 6.48 per cent to close at Rs 2,411.85. Markets were balanced by a spectacular rise in prices of ITC which rose Rs10.90 or 3.98 per cent. June futures expiry on June 30 was a quiet affair. The series closed with losses of 389.90 points or 2.41% at 15,780.25 points. The series had begun at 16,170.15 points. GST numbers for June 2022 were very encouraging at Rs1.44 lakh crore. This gives confidence that the number of 1.4 lakh crore could be taken as a base for the future collections and the gross GST collection could be in the range of Rs 16.5-17 lakh annually.

FIIs or FPIs were sellers to the extent of Rs49,500 cr in June 2022, while domestic funds bought Rs 20,600 cr. In the first half of the calendar year FIIs have sold Rs2.01 lakah cr, which is a record by itself. Against this, Domestic funds have bought Rs1,17,800 cr. All the above figures are only for the equity segment.

The downward gap made on June 13 at the level of 15,886 points to 16,172 points on Nifty and at 53207 to 54,205 levels BSE Sensex is now the focus area. This needs to be filled and sustained if there is to be any upward movement. The previous levels of resistance in 15,900-15950 range all the way to 16,100 points is almost there. On the BSE Sensex, these levels would correspond to 53,750-53,950 points. While we are at the bottom of the gap, we now need to move up and cross the same in the coming period of July 7-13. Without this happening we will remain stuck in a range bound movement. The support is at 52,650-52,750 on BSE Sensex. The final support would be at 51,000 levels. On Nifty, the support would be at 15,350-15,425 points followed by 15,150-15,200 as the final support.

We need strong news flow, which could propel the market upwards. The sentiment currently is negative and people seem to be finding cues which support bearishness in the market. It makes sense in avoiding large open positions at the end of the day as markets are volatile. Trade cautiously.

(The author is the founder of

Kejriwal Research and Investment

Services, an advisory firm)

Arun Kejriwal
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