Market Mood on Monday, 22 July 2024

Anticipation Ahead of the Budget Presentation in Lok Sabha This Week

As the Indian financial markets open on Monday, there is a palpable sense of anticipation and caution among investors and analysts alike, ahead of the Union Budget presentation scheduled for later this week in the Lok Sabha. The upcoming budget is expected to outline key policy measures, economic forecasts, and fiscal strategies that could significantly impact various sectors and financial markets.

Key Points to Watch:

• Sector-Specific Expectations: Investors are keenly observing sectors likely to benefit from the budget, such as infrastructure, healthcare, and agriculture. Market sentiment may shift based on proposed allocations and reforms in these areas.
• Fiscal Measures: The focus will be on any changes in tax policies, subsidies, and government spending that could affect corporate earnings and consumer spending.
• Economic Indicators: Market participants will also be looking for updates on GDP growth projections, fiscal deficit targets, and other economic indicators that could influence market stability.

Sectors significantly impacted by the Union Budget along with some related stock names:

Infrastructure

Impact:

• Increased funding for roads, railways, ports, and urban development projects.
• Boost to affordable housing initiatives.

Related Stocks:

• Larsen & Toubro (L&T)
• IRB Infrastructure Developers Ltd.
• GMR Infrastructure Ltd.
• DLF Ltd.
• NBCC (India) Ltd.

Agriculture

Impact:

• Subsidies and support programs for farmers.
• Investments in irrigation and rural development.

Related Stocks:

• Mahindra & Mahindra Ltd. (agricultural equipment)
• Escorts Ltd. (tractors and farm equipment)
• PI Industries Ltd. (agrochemicals)
• UPL Ltd. (crop protection solutions)
• Coromandel International Ltd. (fertilizers)

Healthcare

Impact:

• Increased budget for healthcare infrastructure and public health initiatives.
• Expansion of health insurance schemes.

Related Stocks:

• Apollo Hospitals Enterprise Ltd.
• Fortis Healthcare Ltd.
• Dr. Reddy’s Laboratories Ltd.
• Sun Pharmaceutical Industries Ltd.
• Cipla Ltd.

Education

Impact:

• Enhanced funding for educational infrastructure and scholarships.
• Initiatives for skill development and vocational training.

Related Stocks:

• NIIT Ltd.
• Career Point Ltd.
• Zee Learn Ltd.
• Navneet Education Ltd.

Manufacturing and Industry

Impact:

• Incentives for domestic manufacturing.
• Tax reforms and support for MSMEs.

Related Stocks:

• Tata Motors Ltd.
• Bajaj Auto Ltd.
• Maruti Suzuki India Ltd.
• Ashok Leyland Ltd.
• Hindustan Unilever Ltd.

Technology and Innovation

Impact:

• Increased funding for research and development.
• Support for start-ups and digital infrastructure.

Related Stocks:

• Infosys Ltd.
• Tata Consultancy Services Ltd. (TCS)
• HCL Technologies Ltd.
• Tech Mahindra Ltd.
• Wipro Ltd.

Energy and Environment

Impact:

• Investment in renewable energy sources.
• Environmental conservation initiatives.

Related Stocks:

• Tata Power Company Ltd.
• NTPC Ltd.
• Adani Green Energy Ltd.
• Suzlon Energy Ltd.
• JSW Energy Ltd.

Social Welfare

Impact:

• Increased funding for poverty alleviation and employment programs.
• Support for women and child development.

Related Stocks:

• Avenue Supermarts Ltd. (DMart) (beneficiary of increased consumer spending due to welfare schemes)
• Hindustan Unilever Ltd. (beneficiary of increased disposable income among lower-income groups)

Transportation

Impact:

• Investment in public transportation infrastructure.
• Development of regional connectivity.

Related Stocks:

• Indian Railway Catering and Tourism Corporation Ltd. (IRCTC)
• InterGlobe Aviation Ltd. (IndiGo)
• SpiceJet Ltd.
• Container Corporation of India Ltd. (CONCOR)

Technical Analysis of Nifty 50

Recent Performance

• Last Week’s High: 24,922
• Last Week’s Low: 24,416

Key Levels

• Immediate Resistance: 24,600
  • Significant call volume change (90%) indicates that this level could face strong selling pressure.
• Next Resistance: 25,000
  • A huge increase in call volume (110%) suggests significant resistance around this level.
• Immediate Support: 24,416 (last week’s low)

Volume Analysis

• Call and Put Volume Changes:
  • 24,600:
    • Call Volume: Increased by 90%
    • Put Volume: Increased by 148%
    • Implication: Strong resistance is anticipated at this level, with heightened interest in both calls and puts, indicating a potential battle between buyers and sellers.
  • 24,700:
    • Call Volume: Increased by 204%
    • Put Volume: Increased by 302%
    • Implication: This level is likely to see significant action. The substantial increase in put volume suggests heightened bearish sentiment or hedging activity.
  • 25,000:
    • Call Volume: Increased by 110%
    • Implication: This is a major resistance level, with a high concentration of call volumes indicating that traders expect it to be a critical point.

Trend Analysis

• Bullish Scenario:
  • Resistance Breakout: If Nifty 50 manages to break above 24,600 with strong volume, it may move towards the next resistance at 25,000. If it breaks 24,922, it indicates a continuation of the bullish trend.
• Bearish Scenario:
  • Support Breakdown: If the index fails to break above 24,600 and starts moving down, watch for the support around 24,416. A break below this level could lead to further downside, potentially moving towards lower support levels.

Strategic for Investors only

For Investors:

• Long-Term Perspective: Focus on the broader market trends and fundamental outlook. Use market pullbacks to add to positions if the overall trend remains positive.
• Watch Key Levels: Monitor critical levels for potential market reactions and adjust positions accordingly.

Disclaimer: The stock market analysis provided herein is based on non-technical factors such as market sentiment, news, and macroeconomic trends. This information is intended solely for educational and informational purposes and should not be construed as financial advice, an investment recommendation, or an endorsement of any particular investment strategy or stock. The analysis reflects the opinions of the author(s) and is subject to change without notice.

minhaj@tng-thenextgen.com