July 1st 2024 Stock Market analysis

Nifty and Sensex Surge on IT and FMCG Stock Rally, Closing with Strong Gains

Benchmark indices Nifty and Sensex ended just shy of their new record highs after a sharp rally in the IT and FMCG sectors during the trading session on July 1. Analysts attribute this rally to attractive long-term valuations. In contrast, the Energy, PSU Bank, and Realty indices were the worst performers of the day.

At the close of trading, the Sensex was up 0.56 percent at 79,476, and the Nifty was up 0.55 percent at 24,142. Approximately 2,398 shares advanced, 1,119 shares declined, and 113 shares remained unchanged. The broader market, including midcap and small-cap indices, outperformed the headline indices, trading 1.1 and 1.6 percent higher, respectively. Notably, both indices reached new all-time highs in the afternoon, hitting 15,832 and 18,597, respectively.

"The domestic market maintained its upward momentum, with a reduction in US PCE inflation raising hopes for a rate cut by the Federal Reserve in September. This optimism significantly boosted IT stocks," said Vinod Nair, Head of Research at Geojit Financial Services. Nair also noted that this trend is likely to continue in the near term due to expectations of a rebound in discretionary spending. Key contributors to the Nifty's performance included Tech Mahindra, Wipro, Bajaj Finance, Grasim, and UltraTech Cement, while NTPC, Apollo Hospitals, Dr. Reddy's Laboratories, Eicher Motors, and SBI were the major laggards.

A double upgrade by CLSA propelled shares of Wipro higher by as much as 4 percent on July 1. The rating was revised from 'Underperform' to 'Outperform,' and the target price was raised from Rs 431 to Rs 607 per share. The brokerage firm does not anticipate further adjustments to Wipro's FY25 guidance and has observed a stabilization in discretionary demand, which is positively impacting the outlook.

All auto stocks were active in the market today as companies released auto sales data. The auto index ended 0.5 percent higher, with sales during the month being largely muted. Nomura attributed this to heatwaves, which reduced footfalls and inquiries across various categories.

"Nifty50 started the month of July marginally lower, but a sharp upward move in IT stocks pushed the index higher, ending the session at a record closing level of 24,142, with gains of 131.35 points," said Aditya Gaggar, Director of Progressive Shares.

The PSU Bank index was the major laggard of the day, closing with a loss of nearly one percent.

Technical Outlook on 2nd July 

Nifty is expected to find immediate support near 24,056, followed by 23,971, with resistances at 24,227 and then 24,312. Currently, Nifty appears to be in a consolidation phase.

Bank Nifty is anticipated to have immediate support near 52,329, followed by 52,084, with resistances at 52,819 and then 53,064. At present, Bank Nifty seems to be in a negative range-bound trade.

Derivative Outlook on 2nd July 

PCR Analysis: Nifty PCR-OI has increased with nifty has  positive which shows PUT WRITING.

Open Interest Analysis: Nifty future June contract OI has increased with positive close which shows Long Buildup.

Cost of Carry Analysis: Nifty July month contract has ended in high compare with Aug contract and low range compare with previous sessions which indicates a mixed trade.

India VIX Analysis: India VIX has closed at 13.83 vs 13.80 (DoD) basis which shows increase in volatility.

‍Maruti Suzuki Achieves Double-Digit June Sales Growth Driven by Strong Exports

India's largest carmaker, Maruti Suzuki, reported strong double-digit sales growth in June, selling 1.79 lakh units, an increase of 12.4 percent compared to the same period last year.

The impressive performance in June was driven by a 57 percent year-on-year rise in total export sales, which reached 31,033 units.

Shares of Maruti Suzuki were up by 0.6 percent at 2:40 pm, in line with the benchmark Sensex.

Maruti's total domestic Passenger Vehicle (PV) sales reached 1.37 lakh units, showing a marginal increase compared to the previous year. This includes Utility Vehicles such as the Brezza, Ertiga, Fronx, Grand Vitara, and Jimny, indicating stiff competition in the UV segment, particularly from M&M. M&M's Investor Day presentation in June revealed plans to introduce six new SUVs by 2030, and a total of 23 launches by 2030. Investors have been bullish on M&M stock due to its promising growth outlook and potential recovery in the farm equipment business for FY25. June also saw M&M and Tata Motors in a tight race for market capitalization, with M&M briefly overtaking Tata Motors to become India's second most valuable automobile company.

However, the mid-sized segment of sedans and compact cars saw fewer buyers in June this year compared to the previous year. This segment contracted in June and Q1FY25, with both the Alto and S-Presso models selling less than 9,400 units in June 2024, down from 14,054 units a year ago. Sales of compact cars such as the Baleno, Celerio, Dzire, Ignis, Swift, and WagonR also decreased, totaling 64,049 units in June compared to 64,471 units the previous year.