Street Signs: Market uptrend, short covering in Tata Motors, and more

Market uptrend to stay or surrender?

After rallying for three straight weeks, the benchmark Nifty50 closed at 16,221 - nearly 6 per cent higher than this year’s low of 15,294 on June 17. Technical analysts say the market may continue to trend upwards, provided it surpasses immediate resistance. “The Nifty now enters a crucial resistance band of 16,293-16,610. On the downside, 16,026 could offer support. Nifty has not gained for more than three weeks in a row since mid-January 2022. It will be interesting to see whether this pattern sustains or breaks in the coming week,” said Deepak Jasani, head of retail research, HDFC Securities.

Short covering seen in Tata Motors

Shares of Tata Motors surged 7 per cent last week. In derivatives trading, the counter saw reduction in open interest, which indicates ‘short covering’. Market observers said certain traders who had built aggressive short positions in Tata Motors were forced to cover their trades, following positive newsflow from China. “Buzz around the automotive consumption stimulus in China triggered a rally in Chinese automakers. This propelled shares of Tata Motors, which has a significant presence in the country,” said an analyst.

Input price benefit for durables firms

Stocks of consumer durables are likely to benefit from a drop in prices of key raw materials. According to analysts, copper, steel, and aluminium prices have corrected 20 per cent in the past three months. The decrease in input costs augurs well for the sector. With the correction in input prices, the need for further price rise has gone down. “We believe a breather was essential, considering durables companies have raised prices incessantly in the past two years. The cumulative price hike was higher than 20 per cent in the past two years,” said a note by ICICI Securities. Havells India and Crompton Greaves are seen benefiting.

Contributed by Sundar Sethuraman & Samie Modak