Budget proposals hurt market sentiments; Nifty50 holds 11,550 levels

The Indian market witnessed another volatile day of trading to close the week on a weak note. The S&P BSE Sensex fell by about 2 percent while Nifty50 saw a decline of 2.1 percent for the week ended July 12.

The index failed to hold on to 11,600 levels but got some support near 11,500 levels. It closed above its 100-days exponential moving average (EMA) which is a comforting sign but overhang of Budget proposals likely to weigh on markets for some more time.

“Sensex is seen closing down for the week as the market reacted negatively to the union budget announcements related to an enhanced tax surcharge on high-income earners. Except for the US equities, other major global benchmarks were also weak,” Sanjeev Zarbade, VP PCG Research, Kotak Securities told .

In terms of sectors, the S&P BSE Metal index rose 0.91 percent, followed by the S&PBSE Realty index which was up 0.55 percent, and the S&P BSE Healthcare index that rose 0.5 percent.

The broader market outperformed as the S&P BSE Midcap index gained 0.41 percent while the S&P BSE Smallcap index rose 0.16 percent on July 12.

Earnings and macros will dictate the trend for markets in the coming week. On the global front, the movement of crude oil prices, as well as geopolitical tensions, will be watched. Crucial support for Nifty index is placed at 11,400-11,460 levels.

“We expect the markets to remain choppy in the near term in the backdrop of weak domestic sentiments given the on-going economic slowdown. The monsoon has shown considerable improvement over the past 1-2 weeks which is positive for the Indian economy,” Ajit Mishra Vice President, Research, Religare Broking Ltd told .

“However, the progress of monsoon would be actively tracked by traders and investors. Further, the earnings announcement by companies is likely to lead to stock-specific volatility. On the global front, on-going geopolitical tensions between US-Iran could have a bearing on Indian markets as crude prices have inched higher and is likely to keep the market participants on edge,” he said.

Stocks in News

Shares of KPR Mill ended lower by over 2 percent on July 12 after the company decided to cancel its buyback plan on the back of newly imposed tax obligations on such offerings. The decision pushed the scrip to its lowest level since April 15, 2019.

Shares of business service provider Quess Corp ended with gains of over 9 percent after the company said its board approved the preferential issue of 7.54 lakh equity shares to Amazon.com NV Investment Holdings LLC.

GNA Axles shares zoomed 20 percent on July 12 after reporting healthy earnings growth in the quarter ended June 2019. The axle shafts maker reported a massive 30 percent YoY growth in consolidated profit to Rs 18.2 crore in Q1FY20.

Manpasand Beverages shares ended close to 5 percent lower after promoter pledged his entire stake. Promoter Dhirendra Singh, on July 4, created a pledge on its entire shareholding of 44.32 percent with Finquest Financial Solutions Pvt Ltd.

Global Update

Stocks in major Asian stock markets mostly closed higher on July 12. Nikkei closed 0.2 percent higher at 21,685.90, while the Topix index fell 0.15 percent, to end its trading day at 1,576.31. Kospi advanced 0.29 percent to close at 2,086.66. Australia’s S&P/ASX 200 slipped 0.29 percent to close at 6,696.50.

Shanghai composite was up 0.44 percent to 2,930.55 and the Shenzhen composite gained 0.506 percent to 1,556.77. The Shenzhen component also gained 0.66 percent to close at 9,213.38. Meanwhile, Hang Seng added 0.23 percent.