FMCG, Pharma top sectors to watch ahead of budget, says Religare Broking – CaFE Invest News

By Ajit Mishra

Last week, markets closed largely unchanged after a period of strong earnings, with positive global cues and a promising start to the earnings season. However, profit-taking on Friday erased earlier advances, leaving the Nifty index at 24,530.90 after a high of 24,854.80.

FMCG and IT sectors maintained their upward momentum, while sectors such as metals, energy and media saw declines. Broader indices also fell, with losses ranging between 2.2% and 2.9%.

Looking ahead, the coming week is of great importance for both the stock markets and the overall economy.

The finance minister will present the government’s first budget on Tuesday, July 23, which is expected to largely follow the interim budget. Globally, US markets are also seeing profit-taking after a sharp rally, which is affecting market sentiment.

Market reactions will depend on the earnings reports of major players such as Reliance Industries and HDFC Bank early in the week, before the focus shifts to the Union budget. Higher volatility is expected in the subsequent sessions.

Key support levels for the Nifty are seen at 24,150 and possibly 23,700, with resistance likely in the 24,800-25,000 range in case of a rebound. Given the mixed signals and increased volatility, a defensive stance towards FMCG, pharma and IT sectors, especially large index stocks, is advisable. It is also prudent to have exit strategies, especially for overbought themes like defence, railways and other PSUs, in case there is further downside.

(About the author: Ajit Mishra is SVP, Research, Religare Broking.)

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