Q1 earnings: Retail investors, Q1 earnings may help Nifty50 cross the 16,000 mark

MUMBAI: A surge in buying interest from retail investors after a brief lull and expectations of firm earnings from the index majors are expected to help Nifty50 break through the stiff resistance at 16,000 level next week.

Money managers expect the market momentum to remain positive for the time being given the near 2 per cent rise in the benchmarks this week despite the large initial public offering of Zomato, which saw bids worth over Rs 2 lakh crore.

“We reiterate our positive yet cautious stance on the market and suggest using dips to add quality stocks. In the absence of any major event, we suggest keeping a close watch on earnings and performance of the global markets for cues,” said Ajit Mishra, vice-president of research at Religare Broking.

While retail interest is likely to drive the market next week, muted activity of foreign portfolio investors may keep a lid on any gains. So far in July, foreign investors have sold Indian equities worth a net of over Rs 6,000 crore due to ongoing concerns over global growth.

“Since early June, we have seen a selloff by FPIs, but this needs to be seen in the context of the overall cautious stance on Asian equities. The fear of rate hikes in the US may explain the selloff, making emerging markets equities less attractive,” said Akshay Thakurdesai, head of securities India for BNP Paribas.

That said, money managers pointed to the strong bidding by FPIs in the public issue of Zomato to suggest that the group is not overtly cautious on India equities.

Besides FII flows, the coming week will be dominated by corporate earnings as nine Nifty50 companies are scheduled to report their June quarter numbers. They include index heavyweights like Hindustan Unilever, and Bajaj Finance. A strong earnings performance by these three can provide the final push to the index to test the psychologically crucial resistance at 16,000 mark.

“The market is trading overbought in the short term and the majority of this rally has come on a slowed-down momentum compared with the major uptrend. We advise traders to maintain a cautiously bullish outlook. A decisive close above 15,950 level may trigger a test of the 16,200 level on the higher side,” said Nirali Shah, head of equity research at Samco Securities.