The week gone by was volatile and contrary to expectations ended with losses. It did show positive signs and despite losing on the first four days of the week, registered gains on Friday, leaving a lot of hope and expectations for the coming week. BSE SENSEX lost 721.06 points or 1.32 percent to close at 53,760.78 points while NIFTY lost 171.40 points or 1.06 percent to close at 16,049.20 points. The broader indices saw BSE100, BSE200, and BSE500 lose 0.66 percent, 0.37 percent, and 0.26 percent respectively. BSE MIDCAP gained 0.88 percent while BSE SMALLCAP was up 0.54 percent. This makes one believe that the breadth of the market was good. The Indian Rupee continued to be under pressure and lost 63 paise or 0.79 percent to close at Rs 79.88 to the US Dollar. This is the low- est closing of the Rupee against the dollar on a weekly basis. Dow Jones lost on the first four days of the week and gained on Friday. At the end of the week, the closing was flattish with Dow Jones losing 49.89 points or 0.16 percent to close at 31,288.26 points. The gains on Friday were 658 points. In what could be termed as important news, RBI has permitted the settlement of international trade in Indian Rupees.
This will go a long way in mitigating the operational risks of importers and exporters. It will also help in a big way in making the rupee convertible in the longer run. Results from technology and IT companies highlighted the rising costs associated with substantially higher attrition and therefore rising employee costs. After TCS, it was the turn of HCL Tech which faced the same issue. Post the result, the share of HCL was under pressure and lost Rs 101 or 10.26 percent to close at Rs 883. The BSETECK and BSEIT were the biggest sectoral losers of the week losing 5.87 percent and 5.82 percent respectively. EVs or electric vehicles seem to have a strange set of problems. It all began with the infrastructure required for the charging of EVs. Then it was the issue of some of the electric scooters catching fire. Now it is the financing of vehicles by banks and NBFCs.
The cost of an EV vehicle is roughly 2/3rd for the battery and 1/3rd for the car. For example, a vehicle costing Rs 12 lakh would be broken up as Rs 8 lakh approximately for the battery and Rs 4 lakh for the car. How the battery behaves or is maintained by the user will decide the residual value of the car for the lender. Herein lies the problem and the conflict area. One would be sure that going forward the issue would get resolved, but for the time being, people looking to finance an EV need to reassess their requirements. Markets seem to be showing signs of resilience even though they were down for the week gone by. The week was choppy and FPI selling continued even though it was lower than the Rs 2,600 crore average per trading day of June 22.
The net sales for the five- day week were at Rs 5,914 crore or a daily average of Rs 1,182 crore. For the first fortnight of July, FPIs have net sold Rs 10,459 crore or Rs 1,045 crore as a daily average. This is not to suggest that FPI selling would stop, but just that probably they could start buying sooner than later. The attractive value of the Rupee is another positive factor from an FPI perspective. The fact that there would be another rate hike of most likely 75 basis points in the US has also been discounted by the markets. Coming to the week ahead, one should see markets consolidating from levels achieved last week. Friday saw a decent level and gives hope for the immediate week. On resistances, the first level would be top of the gap which we had crossed last week at 54,205 and 16,172 points. Once this is done, we have another resistance in the form of an upward gap made on 30th May to take care of. This gap was made when the markets opened with a big gap on Monday in that week. The levels to be countered are 54,936-55,466 on BSE and 16,370-16,506 on NSE. On the support side, we have immediate support at 53,450-53,550 and 15,800- 15,850 respectively. This would be followed by levels of 52,700-52,850 and 15,500 and 15,550 levels.
