It was a third straight week of losses for the Sensex and the Nifty, as rising crude prices and a delayed monsoon played spoilsport.
The Sensex ended the week lower by 0.6 per cent. In fact, Foreign Portfolio Investors sold stocks, while domestic institutions were busy buying into stocks.
Gold crosses 1400 dollar, S&P 500 Hits Record, Oil jumps 9%
Global cues were key for the markets this week. Tensions between Iran and the US could have escalated. The S&P 500 hit record highs this week, while gold broke the $1400 mark for the very first time since 2013.
The dollar fell 1.3 per cent against a basket of currencies, its biggest fall since 2018. On the other hand oil prices jumped a huge 8 per cent, as it was all happening across stocks, oil, dollar and gold
Scores of stocks hit 52-week lows
The Sensex and the Nifty are barely three per cent away from historic highs, but, earlier this week as many as 500 stocks hit 52-week lows. The markets are heavily skewed in favour of select stocks like HDFC, HDFC Bank, TCS, Infosys, ICICI Bank and Reliance Industries.
Scores of stocks that touched 52-week lows this week included the likes of IndiaBulls housing, L&T Finance Holdings, TV Today Network, Yes bank etc.
Going ahead it is likely that we will continue to see volatility ahead of the Union Budget on July 5. Investors are unwilling to take long positions at this stage.
Earnings to be key
The earnings season that will kick-off by the middle of next month would be key for the markets going ahead. It is unlikely that we will see a dramatic change, though larger corporate banks like State Bank of India, ICICI Bank and Axis Bank may do well. IT too is expected to do well and most of these stocks have rallied a bit.
The worry for the broader markets is that the midcap and the small cap space, where all the action was to take place is not firing. Many stocks still continue to languish at 52-week lows.
Beaten down stock may look attractive
This week saw a remarkable fall in quality beaten down names like TV Today, Sun TV and L&T Finance Holdings. Some of these have a strong brand equity and two of these have now hit a new 52-week low making them attractive picks.
On the whole since the markets are at near peak levels, one would have to look at individual stocks, which are beaten down and have the potential to rally.
However, with talks of some capital gains on stocks in the Union Budget, it is advisable to stay in cash at least till the budget uncertainty is done.
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