Will the market up move sustain in August?

The Sensex and Nifty benchmark indices rose 9% each in July as investors moved past concerns of inflation amid resilient corporate earnings and supportive global cues.

The respite followed a recovery in the US, where the frontline Dow Jones, S&P500 and Nasdaq indices advanced 7-12% in July, registering their biggest monthly gains since 2020.  

VK Vijayakumar, chief investment strategist at Geojit Financial Services attributes the rebound back home to foreign investors, which turned net buyers last month after nine months of relentless selling.

FIIs bought around Rs 5,000 crore of shares in July, in a sharp divergence from net outflows of Rs 50,000 crore in June.

Further aiding the sentiment has been the consistent fall in crude oil prices, which are now 16% down to around $103 a barrel from the year’s high of $123 a barrel. 

This, as per analysts, could be a key trigger for recovery in global as well as domestic markets.

G Chokkalingam, founder and chief investment officer at Equinomics Research, says “US Fed balance-sheet reduction plan and oil price would remain the key risk factors in the short-term. We believe that the domestic markets may rise further for a couple of weeks amid volatility and intermittent corrections”.

Moreover, the recent contraction in US GDP for the second straight quarter has heightened fears of a recession in the developed markets.

G Chokkalingam believes that India would be a major gainer of any possible mild recession across the world as oil prices can fall steeper in such a possible scenario, thus arresting rising inflation.

That said, technical charts also indicate near-term bullishness for the markets…

Avdhut Bagkar of Business Standard indicates Sensex, Nifty above 200-DMA; initiates bullishness. Now need to sustain above 20-DMA. Sensex can rise to 62,000 levels; Nifty can hit the 19,000 mark.

Today, Adani Green, Bank of India, Deepak Nitrate, Godrej Properties, Siemens, Lemon Tree and Voltas will be on investors’ radar ahead of their June quarter results. The Street will also react to the earnings of Zomato, ITC and UPL.