This week in Stock market: June 28 to July 2

Last week, the stock market resumed its bullish trend. Nifty started at 15520 levels and closed at about 15580 on Friday. Here’s a weekly Nifty chart.

Chart: Nifty weekly candlestick | Source: Zerodha

Nifty Auto

Last week, the automobile sector finally matched up to the investor expectations and rallied in tandem with other stocks. The bullish move was led by its major contributor — Maruti. The shares of Maruti — which were range-bound between INR 6400 and INR 7300 finally broke out on the upside and are currently trading at INR 7650.

I expect the rally in Auto — more specifically Maruti — to continue until it hits the resistance of INR 7950. Investors would look to book some profits there.

Reliance

While the stock market was aggressively rallying, Reliance actually washed away its gains from the last three weeks in three days with a sharp sell-off. It seems that the Annual General Meeting(AGM) of Reliance, led by Mukesh Ambani, failed to impress the investors.

Source: Zerodha

INR 1900 to INR 2050 is a high-volume trading range for Reliance. If it falls further, it might re-enter the range and stay within it until the next big news. Personally, I believe that the next week shouldn’t bring in a big change in Reliance prices. Anywhere near 2000 would be a great buy!

Nifty Bank

Last week, Nifty snapped its two weeks down-move and returned to positive ways. It created a bullish-engulfing candle, as seen in the chart below.

Chart: Nifty weekly candlestick | Source: Zerodha

Nifty Bank generally is in line with the broader markets. I expect the momentum to continue on the upside. For those who love to do break-out (high-risk trades) — Axis Bank is at an inflection point. Tomorrow’s open would be interesting. If it starts trading actively above 760 levels, we might see an upward spike.

Another industry that might see an uptick in the upcoming week is hospitality. Last week, DeltaCorp, TajGVK and EIH hotels saw some buying. If there are indications of the threat of Wave 3 being low in the upcoming week, these hotels might see a good rally.

The risk-reward ratio is in favour of the buyers even at the current prices. However, a fundamental change in the covid situation (like the Delta variant spreading further) might be detrimental. I say take your chances!

Sugar stocks

Last week, a lot of Sugar-based stocks went berserk. For instance, Andhra Sugar saw a move of 15% on the upside. This move comes after data shows that Sugar production internationally has gone down. Moreover, PM Modi talked about mixing more Ethanol in Petrol to decrease pollution. This will again boost demand from Sugar companies.

However, the current prices of some companies are too high. While I expect the rally to continue, the risk-reward ratio is too skewed to get in. But again, any dip might be a good buy!

Calls/Puts

ITC has been a range-bound share for a long time now. Currently, it is trading between INR 203 to INR 218. INR 203 has been a strong support for the last six months.

I believe a July call option with a strike price of INR 207 can serve as a great entry point if you’re bullish on the overall markets. Most of the other stocks are trading at very high prices and since my view is further bullish, derivatives aren’t making a lot of sense for now.

The markets should continue the bull rally. I will not be surprised if Nifty hits the 16000 mark for the first time in its history this week. If there is any sudden weak global cue, that might trigger some sell-off but a strong bearish move looks difficult.

These are my personal views. How are you viewing the market?

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News Line is it Anyway?

News Line is it Anyway?

Simplified news columns and unbiased opinions on current affairs from experts across various fields.