NIFTY FUTURES opened Friday on a very bullish momentum at 5330 up by 25 points and market kept grinding higher slow and steadily. It made an intraday low of 5325.50 and an intraday high of the day was 5367.50. Nifty futures managed to hold above the 5350 mark throughout the day and finally closed at 5353.
After successfully lifting the NSE Nifty above 5350 on a closing basis, the big task ahead for the bulls is to sustain the buying momentum. Considering the buoyant economic and business climate prevailing in the country, that may not be too difficult. In addition, monsoon appears to be picking up and covered the entire Nation nine days ahead of the schedule. In fact, between July 1 and July 7, the actual rainfall was above the long period average, barring North-East India. Hopefully, the coming days will also witness healthy progress in monsoon.
If that does materialise, the Agriculture Growth will be pretty good in FY11, and would raise the overall GDP growth. Higher Economic Growth can only be good news for India Inc. and their bottomlines. That in turn will auger well for the stock market and investors. Inflation is also likely to moderate from double-digit levels in the coming weeks and months. Given this upbeat background, India clearly is among the few bright spots in the still murky global picture. So, there is a compelling case for investors to buy into this India shining story from the medium to long term perspective.
The key benchmark indices surged for the second straight day as expectations of strong Q1 June 2010 results, a recent upward revision in India's GDP growth forecast by the International Monetary Fund and the stock market regulator Securities & Exchange Board of India (Sebi)'s recent decision to cut exposure margins on stock derivatives, boosted sentiments. Except the BSE FMCG index, all the other sectoral indices on BSE were in green.
The latest IIP data and monthly inflation reports are due next week. The other big event next week is Infosys results (13th July; Infosys jumps 5% ahead of Q1 results) and more importantly guidance. The stock has hit a 52-week high. Let’s see if the management tone manages to lift the IT sector as a whole.
The next major trigger for the market is Q1 June 2010 results of India Inc, which will start trickling in from the second week of July 2010. Advance tax collections for the first quarter of the current financial year point to a strong growth in corporate sector profits. Advance tax payments by companies during the April-June quarter account for 15% of the total advance tax payable in the fiscal year. Corporate advance tax for the first quarter stood at Rs 26,876 crore, against Rs 20,456 crore in the year-ago period, a rise of 31.4%, the fastest since 2005.
Globally too, things improved last week to some extent and risk appetite staged a smart comeback. Unless our markets are hit by some fresh bad news, the current momentum should last a bit longer. The pressure points include anemic growth in the US, debt problems in Europe and slowdown in China.
In my view, Nifty Futures is Bullish now. But only heavy buying will lift Nifty Futures able to take out the 5380–5400 zones. Even, we could see the levels of 5550 if there is strong upward momentum with good volumes.
