D-Street Corner: Market gains 2.7% in highly volatile week, investors richer by 5.5 lakh crore; what should investors do on Monday?

Stock market outlook: The Indian market ended the week with over two and half per cent gains. Benchmarks Nifty50 and Sensex gained 2.7% each in the week ended on June 24. Interestingly, the week gone by witnessed four positive closings and ended in the red only on one occasion on June 22. Auto remained the top performer, gaining up to seven per cent, while BSE Metal fell four per cent in the just concluded week.  

In a highly unpredictable week, the investors got richer by more than 5 lakh crores. Against market capitalisation of Rs 2,36,77,816.08 on June 17, the m-cap of BSE listed companies rose to 2,42,27,901.56 on Friday, a 5.5 lakh crore jump in investors' wealth in the last five trading sessions.  

Meanwhile, taking cues from global markets and softtening commodity prices, benchmark indices Nifty 50 gained 0.92% and Sensex edged higher by 0.88% to settle at 15,699.25 and 52,727.98 respectively on Friday.  

With Accenture downgrading its earnings forecast, Nifty IT was the only sectoral index to end in the red, while all sectors comfortably sat in the green. Bank and metal gained the most on Friday. In the broader market, Nifty midcap gained 1.4% and smallcap ended higher with 1.7%.  

As the market extended its winning streak to the second day, here is what experts make of current trends in the market. 

Vinod Nair, Head of Research at Geojit Financial Services. 

"Mirroring a firm trend in the global market and in response to declining commodity prices, the domestic market maintained its positive trend. The up-move was supported by broad-based buying, except in IT, which remained under pressure after Accenture downgraded its earnings forecast. We expect the market to showcase similar short-term rebounds until fresh trigger fuels the global concerns. 

Milind Muchhala, Executive Director, Julius Baer India 

The Indian equity markets are continuing to display an extremely high level of volatility, in line with the global markets, although it is trying to find some sort of a bottom amidst all the gloom and uncertainty. The expectations of continuing tightening/tapering by the global central banks and no resolution yet on the geopolitical front are leading to sustaining a risk-off environment.  

The rising bond yields (probably pricing in the expected front-loading of action on rates), gradual deterioration of the incremental economic data globally and the increasing chatter about a possible “stagflation” in the coming quarters are further adding to the pessimism.  

Although, the volatility can remain high in the near term, it presents an attractive opportunity to build up on equity exposure, as the healthy earnings momentum is expected to remain a key pillar for the markets. 

Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas 

In the penultimate week, the Nifty had broken the support zone of 15700-15800. In the week gone by, it bounced back to test this area, which is now acting as a resistance zone. Despite a strong start on June 24, the index couldn’t take out this barrier. As long as the index stays below this hurdle, it is expected to witness consolidation in the short term. The hourly momentum indicator has a negative divergence, which also suggests further consolidation in the coming sessions. Thus, unless the level of 15800 is crossed on a closing basis the Nifty can dip towards 15400 in the short term. 

V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services. 

"There are some clear economic and market trends. Leading indicators such as PMI and retail sales in Europe and US indicate economic slowdown. Most central banks of the world are hiking rates in this slowdown.  

Therefore, the slowdown will continue and may aggravate pushing the US economy into recession. Since the market knows this, equities are in oversold territory, triggering short-term upmoves. Accenture's results indicate continued robust demand for IT. Indian IT companies' Q1 results are likely to be very good, but the stock movements will be decided by their FY23 guidance. A Crash in metal prices is a strong positive for autos. 

(Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)