What is your view on markets for 01 July 2021?

On Wednesday, the Nifty made several attempts to get past 15,800 but there were repeated bouts of selling in the end which pulled the markets towards the 15,720 levels. The A/D ration of the Nifty stocks continued to be unfavourable at the rate of 17: 33 and this has been the consistent trend, which shows the market breadth giving up momentum.

The core sector data continued to look good on yoy basis, but that is off the point. The real test was the sequential data. There were concerns on core sector with sequential data indicating that the COVID 2.0 impact may be around 15% on core sector based on 2 month growth performance since the onset of COVID. That will take some recovery.

Foreign investors were net sellers to the tune of Rs.1,647 crore on 30 Jun but on the positive side, the domestic institutions infused Rs.1,520 crore into the markets. FPIs ended the month in the positive but there has been a shift to selling towards the end of the week. July will be a bigger test of how FPI flows pan out.

On Wednesday, the Dow was robustly higher by 60 bps but then the NASDAQ ended slightly lower while European markets came under sharper pressure during the day. In early trades, the SGX Nifty is absolutely flat with a slight negative bias. Most likely, my hunch is that the core sector could put pressure on Nifty.