A morning walk down Dalal Street | Pullback rally possible if Nifty closes decisively above 11,300

Apart from persistent selling by FIIs, muted corporate earnings growth from India Inc., concerns over a slowdown in the Indian economy, below-normal monsoon, trade talks as well as geopolitical concerns weighed on sentiment.

The persistent selling by foreign institutional investors (FIIs) on D-Street pulled the benchmark indices below their respective support levels in the week gone by.

FIIs pulled out more than Rs 7,000 crore from the cash segment of Indian equity markets while, for the month, they have pulled out more than Rs 14,000 crore.

The S&P BSE Sensex failed to hold on to 38,000, while the Nifty50 closed below 11,300 levels for the week that ended on July 26.

Apart from persistent selling by FIIs, muted corporate earnings growth from India Inc, concerns over a slowdown in the Indian economy, below-normal monsoon, trade talks, as well as geopolitical concerns weighed on sentiment.

The S&P BSE Sensex lost 1.19 percent, while the Nifty50 saw a dip of 1.18 percent for the week that ended on July 26. But the bigger fall was seen in the broader market. The S&P BSE Smallcap index dropped 1.88 percent, while the S&P BSE Midcap index closed lower by 1.58 percent.

As many as 29 stocks in the S&P BSE 500 index fell 10-20 percent, which include names like Jet Airways, Vinati Organics, GRUF Finance, VIP Industries, CARE Ratings, Vodafone Idea, Bajaj Electricals, Mcleod Russel, and Cox & Kings, etc. among others.

The rupee rose by 15 paise on July 26 to close at 68.89 against the US currency, snapping its four days of losses following a recovery in the domestic equity market.

On the institutional front, foregin portfolio investors (FPIs) were net sellers in the cash segment of Indian equity markets for Rs 1503 crore, while the domestic institutional investors (DIIs) were net buyers to the tune of Rs 1917 crore, according to provisional data.

Big News:

As many as 72 stocks will declare their results for the quarter that ended on June 2019, which include names like Castrol India, Cochin Shipyard, Dr Reddy's, DLF, Orient Cement, Sanofi India, SPARC, Tata Sponge, and Bank of Maharashtra.

Dr Reddy's: PAT likely to fall by 7 percent YoY

Sanofi India: PAT likely to grow by 3 percent YoY

Strides Pharma: PAT likely to grow by 3500 percent YoY

(All the estimates are from Motilal Oswal)

Technical View:

The Nifty firmed a bullish candle on the daily charts and it formed a bearish candle, the third time in a row, on a weekly basis.

The positive close is a good thing as the bulls managed to take charge of Dalal Street after many days, but a pullback rally is only possible if the index closes decisively above 11,300 level, experts feel.

The initial targets for the rally continues to be around 11,400 while on the downside supports are seen at 11,210, 11100 levels

Three levels: 11,210, 11,307, 11,400

Max Call OI: 12,000, 11,500

Max Put OI: 11,000, 11,200

Stocks in news:

ICICI Bank: The country's largest private sector lender, ICICI Bank, posted a profit of Rs 1,908 crore in June quarter (Q1) over lower provisioning and healthy NII growth. It was against a loss of Rs 119.55 crore reported in the year-ago period.

Electrical equipment manufacturer Havells India, on July 27, reported a 16.3 percent year-on-year (YoY) decline in June quarter consolidated profit on muted growth in key segments like cables, lighting and switchgears.

Auto stocks will be in focus after the GST Council has decided to reduce the rate on electric vehicles (EVs) from 12 percent to 5 percent, according to a CNBC-TV 18 report.

Technical Recommendations:

We spoke to Angel Broking and here’s what they have to recommend:

SUN TV: Buy| LTP: Rs 491.05| Target: Rs 530| Stop Loss: Rs 469| Upside 8 percent

Dr Reddy’s Laboratories: Buy| LTP: Rs 2,704.95| Target: Rs 2,780| Stop Loss: Rs 2,615| Upside 3 percent

MORE WILL UPDATE SOON!!