Indian stock indices closed the week and July on a strong note, with both indices climbing more than 2.5% through the week and advancing nearly 2.1% in July. Despite concerns over rising oil prices, the markets remained buoyant, supported by strong corporate earnings and significant foreign portfolio investor (FPI) inflows.
The Nifty index, while ending the week higher, remained within its five-week range of 23,750-24,450, indicating continued indecision among market participants. Analysts attribute this to discomfort with oil prices above $80 per barrel and geopolitical tensions in West Asia. However, the earnings season has exceeded expectations despite challenges such as higher raw material costs.
Brent crude futures were trading at $90 per barrel late on Friday, up from $71.6 at the start of the month. This rise in oil prices has been a concern for market participants, but strong earnings have provided a buffer. The Nifty IT index gained 6.8% for the week, outperforming other sectors.
“Despite Nifty ending the week higher, it has been unable to break out of its five-week range of 23,750-24,450, indicating continued indecision among market participants.”
Gaurav Sharma, head of research, Globe Capital Market
Foreign portfolio investors net bought shares worth Rs 277 crore on Friday, while domestic institutions bought shares worth Rs 2,260 crore. This marks the first instance of FPI buying since February, with foreigners purchasing over Rs 10,000 crore in July.
The Nifty’s Volatility Index (VIX) fell 3.3% to 11.76 levels, indicating relief among traders. Among broader market indices, the Nifty Midcap 150 gained 0.5% and the Nifty Small-cap 250 rose 0.4% for the week.
“We believe that unless the index breaks above 24,500 and closes above that level, it is likely to remain range-bound and witness a sideways movement.”
Hitesh Rathi, technical analyst, Angel One
Gaurav Sharma, head of research at Globe Capital Market, noted that the Nifty could be on the verge of a breakout above the key 24,500 zone, supported by strong earnings, easing oil prices, and lower global volatility.
Background
The Indian stock market has been navigating a complex landscape marked by rising oil prices and geopolitical tensions. Despite these challenges, robust corporate earnings and significant FPI inflows have provided support, helping the markets remain resilient.
Looking ahead, market participants will closely watch for any breakout above the 24,500 level on the Nifty index. The performance of the IT sector and the resolution of geopolitical tensions will also be key factors influencing market direction.
