Markets brace for earnings and external headwinds

Hans India

19 hours ago

Spookedby fresh round of Trump tantrums on tariffs, rising uncertainty over the contours of India-US trade deal, disappointing start to the earnings season from TCS earnings and profit booking at higher levels; markets drifted lower during the week and lost over a per cent.
The Nifty was down 1.22 per cent 25,150 and the Sensex closed 1.11 per cent lower at 82,500. Under the shadow of benchmark indices, the broader markets were also on weak wicket. The combined market valuation of eight of the top 10 valued firms eroded by Rs 2.07 lakh crore (Rs 2,07,501.58 crore) last week, with Tata Consultancy Services and Bharti Airtel emerging as the worst hit.
Despite erratic spread, the monsoon in the last six weeks has been 'surplus' compared to the normal benchmark. In the age of Trump, Crypto currency is gaining 'acceptance'. India needs regulation around the treatment of US dollar-denominated stablecoins, because it is also a concern of capital flight. The choice is no longer between embracing or rejecting. For countries with a clear agenda- from attracting investment, to sidestepping sanctions, or even currying favour with the World's Elite- crypto is becoming legit play.
Statement from the Taiwan President Lai Ching-te highlighted China's use of influence warfare and military intimidation aimed at annexing Taiwan as part of its broader 'great rejuvenation of the Chinese nation' policy and expanding hegemony in the western Pacific.
After Ukraine and Palestine incidents, global market players fear China plans to annex Taiwan. Globally, uncertainty around potential tariff moves by the Trump administration continues to weigh on sentiment, but optimism has risen around an early trade deal between US-India.
On the macroeconomic front, closely track the WPI and CPI inflation data scheduled for July 14 for further cues on the economy. Looking ahead, the earnings season will be in full focus. Market players will closely watch results from HCL Tech, Tech Mahindra, Axis Bank, ICICI Bank, Wipro, JSW Steel, L&T Finance, and HDFC Bank, among others.
Follow market trends and history. Don't speculate that this particular time will be any different. For example, a major key to investing in a specific stock is its performance over five years.
FUTURES & OPTIONS / SECTOR WATCH
Unnerved by the uncertainty surrounding the trade deal between India and the US and unabated news flow on tariffs on different nations by Trump administration; has made traders and investors cautious in the market. Profit booking was seen at higher levels. Major losses were seen in Defence, IT and Capital Market sectors. TCS results were not very encouraging and triggered caution in IT stocks. In the options segment, prominent Call open interest for Nifty was seen at the 25,500 and 25,300 strike, while the notable Put open interest was at the 25,000 and 25,200 strike. For Bank Nifty, the prominent Call open interest was seen at the 57,000 strike, whereas notable Put open interest was at the 56,000 strike. Implied volatility (IV) for Nifty's Call options settled at 13.51 per cent, while Put options concluded at 14.24 per cent. Selling of Call options was seen higher than that of Puts in weekly as well as monthly expiries. The India VIX, a key indicator of market volatility, ended the week at 14.26 per cent. The Put-Call Ratio Open Interest (PCR OI) stood at 1.06 for the week. Currently, both Nifty and Bank Nifty are trading above their long-term exponential moving averages and are near to their rollover levels. The Nifty futures rollover range is 25,200–25,300, while for Bank Nifty, it is 56,600–56,700. The outlook remains 'buy on dips' as long as both indices stay above these rollover levels. Supports for the Nifty are at 25,100 and 24,750; resistances are at the 25,400 and 25,650. As SEBI ramps up scrutiny of the options market, observersof options market are pointing to mysterious moves in contracts tied to the nation's benchmark index Nifty as evidence of questionable trading activity. Market activity has slowed in Indian derivatives since Jane Street was barred from trading. On last weekly expiry, the first major expiration day that followed the ban, the India NSE Volatility Index tracking bets for Nifty swings ended at its lowest level in more than a year, and volume of options on the gauge was lower than on recent expiration days. The total premium paid for the derivatives on the nation's largest bourse tumbled to a four-month low.
Stocks looking good are Blue Star, Hind Unilever, JSW Energy, JSW Steel, HDFC AMC, PFC and PGEL. Stocks looking weak are BSE, Bajaj Auto, Chambal Fertilisers, Tata Elexi and Sona Comstar and TCS.
(The author is a senior maket analyst and former vice-chairman, Andhra Pradesh State Planning Board)