Nifty bulls await directional move, auto stocks in focus

Perched near record high levels, Sensex and Nifty traded near the flatline on Monday, the first trading day of July month, after consolidating in Friday's session.

Auto stocks were in focus amid the release of June month sales numbers. Shares of Samvardhana Motherson, Hero Moto, Bharat Forge, Maruti Suzuki, and Bajaj Auto rallied over 1% each. Within the Nifty50 pack, JSW Steel, and Bharti Airtel rallied over 1%, while NTPC, Power Grid, and Apollo Hospitals fell up to 2%.

The momentum was stronger in mid and smallcap indices. Metals, pharma, media and oil and gas sectors were trading in the green, while banks, financials and real estate stocks were under pressure.

Shares of GRSE rallied over 7% after winning an order from the Bangladesh government. Wockhardt shares were up over 12% after the pharma major said its investigational drug has successfully treated a young immuno-compromised cancer patient in the US.

Expert Take
The US core CPE for May coming at 2.6% is good news for the bulls since it increases the possibility of rate cuts by the Fed this year, analysts said.

"Despite high valuations, the market is likely to remain resilient. The healthy trend in the recent rally, which has pushed Nifty by 6.5% in June, is that it is being led by fundamentally strong largecaps like RIL, leading private sector banks, and Bharti Airtel. The high delivery-based buying in largecaps is a strong trend that will impart resilience to the market," said Dr. V K Vijayakumar of Geojit Financial.

Chart readers said the market may soon make a directional move as directional moving indicators have begun to diverge.

Global markets
US stocks slipped Friday as traders digested fresh economic data that indicated slowing inflation, as well as better-than-expected consumer sentiment figures. An early rally fizzled as investors digested in-line inflation data and weighed political uncertainty after the US presidential debate.

Asian stocks were subdued on Monday as traders pondered the US rates outlook, while the euro edged higher after the far-right won a smaller share of the vote in the first round of France's shock snap election than some polls had projected.

Currency Watch
The Indian rupee fell 6 paise to 83.40 against the US dollar in early trade. Last week was a choppy one for the rupee, with the inclusion of Indian bonds into the JPMorgan emerging market index and the expiry of the June currency futures.

Crude Impact
Oil prices edged up in early trade on Monday, supported by forecasts of a supply deficit stemming from peak summer fuel consumption and OPEC+ cuts in the third quarter, although global economic headwinds and rising non-OPEC+ output capped gains. Brent futures were near the $85/barrel mark this morning.