Bullish hangover continues- by Jimeet Modi, CEO, SAMCO Securities

NIFTY this week opened on a high note but during the week profit booking dragged the indices lower but later bounced back to close in the positive territory. There is some amount of consolidation happening at the current juncture. Results of major companies are almost out indicating acceleration in the general performance and going forward the monsoon too would favourably impact the results for coming quarters too justifying the market’s alleviated levels. M&M reported 16% growth in Q1 PAT, Motherson Sumi 13% PAT growth, Lupin 55% PAT growth, Dhanuka Agritech 16% PAT growth, Manappuram Finance 23% growth, Hero Moto 18% rise in PAT, Aarti Industries 35% growth in Q1 PAT respectively, at the same time Bank of Baroda reported it’s PAT down by 60%, Idea Cellular reported it’s PAT down by 74%. Markets have been quick in discounting the numbers and at the same time monsoon session of the Parliament coming to an end, the market will watch out global factors in the near term.

Key events of the week: Yes Bank to raise growth capital in excess of 1 billion USD to capture a larger pie in the fast growing borrowing needs of India Inc. Considering the plans, it would be profitable to invest in banks like Yes Bank and other private sector banks as part of investors portfolio for the long term. After a long wait AB Nuvo and Grasim to undergo corporate restructuring, intending to unlock value for the minority shareholders but the street is expecting the other way. HDFC and Max Life merger cleared by the respective boards for creating Insurance be mouth worth Rs 67000/- Crs the largest listed entity.

Technical Outlook: Nifty50 continues to show resilience inspite of overextended rallies. The higher top and higher bottom sequence is propelling markets to newer orbits. The underlying trend is strong enough that any corrections are of sideways and shallow in nature. Friday’s strong close indicates a strong bullish candle indicating further upside in the coming weeks. The markets can remain at over bought levels for extended periods of time during strong liquidity periods. Traders should trail their stops on their long positions below 8500 levels.