Apart from quarterly earnings by market heavyweight TCS, Indian stock market next week will take cues from key macro indicators like IIP data and inflation, progress on monsoon and developments on the COVID front, say analysts. TCS will announce its results on 9 July. Supported by positive global markets, benchmark stock market indices Sensex and Nifty posted over 2% gain last week to close near four-month highs on Friday. Both indexes notched their third straight weekly gain when they closed at 36,021 and 10,607 respectively on Friday.

According to Sanjeev Zarbade, VP PCG Research, Kotak Securities, “Risks to the markets emanate from further spiraling of infections and flare-up on Indo-China border.”

Analysts say that Nifty faces strong resistance in the 10650-10700 zone on the upside.

Dalal Street: Here is what analysts expect for next week

Ajit Mishra, VP Research, Religare Broking

“It turned out to be a good week for the bulls as the Nifty index surpassed the major hurdle at 10,550 (200 EMA) on the daily chart and settled with the gains of over two percent. Besides, encouraging cues from the local front viz. improvement in auto sales on MoM basis and an uptick in the manufacturing PMI data also boosted the sentiments. Finally, the Nifty index closed at 10,607.35; higher by 2.1%.”

In the coming week, participants will be eyeing key macro indicators like IIP data, CPI and WPI inflation. Besides, the progress of monsoon and developments on the COVID front will also be in focus.

“On the earnings front, IT major, TCS, will announce its results on 9 July. Interestingly, the stock has witnessed tremendous buying interest in the last two weeks and reached closer to its record high before the results.”

“We expect Nifty to take a breather around 10,750 level, after the three successive weeks of advances. Though the benchmark is inching higher gradually, the underperformance of the banking pack is still a major concern. We advise keeping a close watch on the banking index for the sustainability of the prevailing up move. Meanwhile, traders should maintain their focus on stock selection and risk management.”

Nagaraj Shetti, Technical Research Analyst, HDFC Securities

“Nifty is currently nearing a key overhead resistance around 10650-700 levels, but there is no indication of any reversal type pattern at the highs. The positive sequential movement like higher tops and bottoms continued on the daily chart and Nifty is in the process of forming a new higher top of the sequence. Still there is no confirmation of any higher top reversal at the highs.

Nifty as per weekly chart formed a long bull candle, that has engulfed the small range high wave type candle pattern of last week. Nifty is now placed at the key resistance of 10650 on the weekly chart as per change in polarity (previous swing low of Jan-Feb and Aug-Sept 2019)

The short term trend of Nifty continues to be positive. The choppy movement at the upside could continue in the early part of next week. The overhead resistance of 10650-10700 is expected to weigh high for the Nifty in next week. Hence, minor profit booking from the highs is likely. A sustainable move only above 10700 could open up next upside targets of 11000-11200 in the next couple of weeks.”

Jimeet Modi, Founder & CEO, SAMCO Securities & StockNote

“Nifty 50 after forming a spinning top candle in the previous week has rallied swiftly. The index is now hovering around 10600 mark which had acted as strong support on the way up and might turn into a crucial resistance. Each leg of the rally from March till now is getting narrower in the price range and the whole rally has occurred in the form of a rising wedge pattern which is bearish and might be nearing its termination. Though there is a lot of optimism on the Street and global equities on the hope of positive developments on drug trials, we assume the market is overbought in the short term and expect limited upside. Going ahead we suggest investors to remain cautious as any negative development on global equity might trigger a risk aversion sell off. Support for the index is now placed at 10200.”

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