The Indian stock market is likely to open higher on Monday, extending gains to a fresh record, following a rally in global peers as investors sentiment improved on the back of strong economic data and signs of cooling inflation in the US.
Trends on GIFT Nifty, erstwhile SGX Nifty, indicated a gap-up start for the Indian market as it was trading at a premium of nearly 70 points from Nifty Futures Friday close.
The SGX Nifty has been rebranded as GIFT Nifty from Monday as all the derivative contracts worth $7.5 billion, earlier traded in Singapore, have been shifted to the NSE International Exchange (NSE IX) in Gandhinagar, Gujarat.
The Indian equity benchmark indices, Sensex and the Nifty, ended at their fresh closing highs on Friday as healthy macroeconomic indicators boosted investor sentiment supported by global cues amid easing concerns over a recession in the US.
Persistent inflows from foreign investors also bolstered Indian equities as foreign portfolio investors (FPI) have invested ₹47,148 crore in June on top of the ₹43,838 crores in May, as per data from NSDL.
“India’s macros are steadily improving, and GDP and corporate earnings growth have the potential to improve further from here. So FPIs have reversed their strategy to ‘Buy India, Sell China’,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
FPI money is chasing performance and prospects. FPIs continued to invest in financials, automobiles, capital goods and construction related stocks, he added.
“Valuations in India are rich, from a short-term perspective. Therefore, even while continuing to invest in India, FPIs are likely to turn a bit cautious, going forward,” Vijayakumar said.
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On Friday, Foreign Institutional Investors (FIIs) net bought Indian shares worth ₹6,397.13 crore, while Domestic Institutional Investors (DIIs) net purchased Indian equities worth ₹1,197.64 crore.
On the technical front, a long bull candle was formed on the daily chart with a gap up opening, which is for the third consecutive session. The opening upside gaps of the last two sessions are unfilled. As per the gap theory, this pattern could be considered as a runaway gap, which reflects an uptrend continuation pattern in the underlying.
“Nifty witnessed a decisive upside breakout of the hurdle of 18,900 levels in this week and zoomed into all time highs, as per weekly chart. The formation of long bull candle during upside breakout signal resumption of sharp up trended movement in the market. The negative candlestick pattern (bearish dark cloud cover) of last week has been taken out decisively on the upside,” said Nagaraj Shetti, Technical Research Analyst, HDFC Securities.
The near term uptrend of Nifty remains intact and one may expect Nifty to reach up to 19,500 levels in the coming week, he added.
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Nifty
The Nifty reached a new all-time high on Friday following a breakout from a period of consolidation, indicating strong bullish reversal. Analysts believe the overall trend appears positive in the near term as the index has consistently remained above its moving average.
“The momentum indicator RSI has shown a bullish crossover on the daily timeframe, suggesting strong momentum. Looking ahead, there is potential for the index to move towards 19,450 in the short term, indicating further upward movement,” said Rupak De, Senior Technical analyst at LKP Securities.
On the downside, the support for Nifty is placed at 19,000. De believes the market is currently exhibiting bullish characteristics, with the Nifty reaching new highs as long as it sustains above 19,000.
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Bank Nifty
The Bank Nifty index has been posting gains for three days in a row and the Relative Strength Index (RSI) indicates strong momentum and a bullish sentiment in the index. On the weekly chart, the index has given a downwards consolidation breakout, suggesting a rise in optimism.
“The trend looks positive for the short term. Immediate support is visible at 44,500 where Put writers have added significantly in the open interest; while the 45,000 strike price has the highest open interest in calls, which suggests that Bank Nifty may encounter some resistance at that level,” said De.
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Disclaimer: The views and recommendations given in this article are those of individual analysts and brokerage firms. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
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