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“NIFTY In Respite: How Will Seven Weeks of Gains Fare? What To Expect?

The Indian stock market has been on a roller coaster ride, with Nifty posting gains in seven out of the past eight weeks. Last week, however, the Nifty 50 took a breather and ended the week on a flat note, settling at 11,248.15. Going forward, market experts expect the Nifty 50 to move in a sideways range. This is primarily due to the seasonally weak period, which usually happens during the mid-July to mid-August time frame. Additionally, the current macroeconomic environment does not look favourable with increasing Covid-19 cases and rising commodity and oil prices impacting market performance. Moreover, the upcoming quarterly results season is likely to be lacklustre, as the extended lockdown had put significant pressure on corporate earnings. This could result in further downside pressure on markets in the near term. On the regulatory front, the Securities and Exchange Board of India (SEBI) has proposed changes to the index constituents of the Nifty 50, which if implemented, could have an impact on market performance. However, some positives can be derived from certain factors such as lower-than-expected inflation readings, lowest interest rates since 2003, and government’s continued commitment to the economy’s revival. Given the current scenario, investors are advised to adopt a careful approach and focus on stocks that have shown consistent performance. It is also recommended to look out for companies with high dividend yields, secure balance sheets, and managerial competence. Overall, the Nifty 50 is expected to trade in a range-bound manner in the near term. However, any positive news on the economic and corporate development front could offer a spark and benefit the markets in the long run.