Morning Market Report.....
Volatility Lingers, Optimism Rises: Market Balances Ceasefire Hopes with Global Macro Jitters...
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- Nifty 50 opened strong at 25,179.90, scaling a high of 25,317.70 by noon on optimism around an Iran-Israel ceasefire and a sharp fall in crude oil prices.
- However, reports of a possible ceasefire breach by Iran later in the day triggered selling pressure, briefly pulling the index below the 25,000 mark, before a late recovery saw it close at 25,044.35, up 0.29% (72.45 points).
- The Sensex added 158.32 points, or 0.19%, to close at 82,055.11.
The day’s action reflected a tug-of-war between hope and uncertainty, with banking stocks outperforming, while oil & gas counters bore the brunt of falling crude prices. The bank scrips are expected to do well in the near future following the repo rate cut by the RBI.
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Why PSU Bank Stocks Are Poised for a Strong Run.....
Indian PSU (Public Sector Undertaking) bank stocks are set for a promising near-term rally. Here’s why the outlook is compelling:
🧨RBI’s Repo Rate Cut:
The Reserve Bank of India’s recent rate cut is a significant tailwind. Lower borrowing costs boost net interest margins (NIMs) and stimulate credit demand, especially in rate-sensitive retail and MSME segments. PSU banks, with their extensive domestic lending portfolios, are prime beneficiaries.
🧨Robust Credit Growth:
India’s double-digit credit growth shows no signs of slowing. An accommodative monetary policy is likely to further fuel demand for housing, auto, and infrastructure loans—areas where PSU banks have ramped up lending.
🧨Improving Asset Quality:
Non-performing assets (NPAs) in PSU banks are steadily declining, driven by recoveries, write-offs, and enhanced risk management. High provisioning levels mean incremental recoveries, such as through NCLT resolutions or debt restructuring, directly enhance profitability.
🧨Strong Government Backing:
The government continues to support PSU banks through capital infusions, policies like the ECLGS for MSMEs, and financial inclusion initiatives such as Jan Dhan and digital banking. These measures strengthen both resilience and market reach.
🧨Attractive Valuations and Dividends:
PSU bank stocks trade at compelling valuations compared to private peers. With rising profitability, many are resuming or increasing dividend payouts, appealing to investors seeking both yield and growth.
🧨Infrastructure and Capex Boom:
The government’s focus on infrastructure and public capital expenditure positions PSU banks—key lenders to core sectors—to benefit from heightened credit demand.
Conclusion:
A combination of supportive policies, favorable macro conditions, and internal improvements sets the stage for PSU banks to outperform. Their undervalued status amplifies the upside potential if this momentum holds. Let me know if you’d like a chart or detailed sector breakdown.
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Sectoral Performance:
- Winners: Banks, real estate, mid- and small-caps
- Losers: Oil & Gas, select FMCG and auto counters
Key Drags:
- ONGC – ↓ 2.94%
- Trent – ↓ 0.97%
- Reliance Industries – ↓ 0.43%
Broader Markets:
- BSE MidCap – ↑ 0.54%
- BSE SmallCap – ↑ 0.71%
- Market Breadth: Positive, with 2,662 stocks advancing and 1,339 declining on BSE.
Volatility & Macro Indicators:
- India VIX: ↓ 2.88% to 13.64, signaling a drop in short-term volatility expectations.
- 10-year G-Sec Yield: ↓ to 6.271%, down from 6.308%.
- Rupee: Firmed up to ₹86.0440/USD from the previous ₹86.7850/USD.
- Gold (MCX, Aug): ↓ 2.03% to ₹97,374
- Crude Oil (Brent, Aug): ↓ 2.62% to $69.61/bbl
- Dollar Index (DXY): ↓ 0.30% to 98.08
- US 10-year Yield: ↓ to 4.291% post weak consumer sentiment
Global Market Snapshot:
Global sentiment remained buoyant on Tuesday after hopes of an Iran-Israel ceasefire lifted investor spirits, despite the lack of formal confirmation.
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US Markets:
- Dow Jones: ↑ 1.2% (507 pts)
- S&P 500: ↑ 1.4% – nearing all-time highs
- Nasdaq: ↑ 1.4%, led by Tesla (↑ 8% on Robotaxi launch in Austin)
- Cboe VIX: ↓ 12%, as geopolitical risks cooled
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Fed Watch:
- Jerome Powell reiterated the Fed's "wait-and-watch" approach, even as internal calls for a July rate cut gain momentum.
- Weak US consumer confidence added to expectations of easing, although Powell faces political heat from Trump, who called him “dumb” and urged action.
Asian Market Check (as of 8:30 AM IST):
- SGX Nifty: ↑ 0.35%, hinting at a positive start for Indian markets
- Nikkei 225: ↑ 0.8%
- Hang Seng: ↑ 0.6%
- Kospi: ↑ 0.5%
- Shanghai Composite: Flat to marginally higher
Stocks in Focus:
- Bondada Engineering: ↑ 5% – LOA for 400 MWh battery project in Tamil Nadu.
- KPIT Technologies: ↓ 6.12% – weak mid-quarter update and forex concerns.
- Ugro Capital: ↑ 5.30% – Anuj Pandey appointed as CEO.
- Gland Pharma: ↑ 1.29% – EIR received for Vizag facility from USFDA.
- Enviro Infra Engineers: ↑ 12% – bags 69 MW solar projects.
- Astec Lifesciences: ↑ 7.42% – board approves Rs 250 cr rights issue.
- Garware Technical Fibres: ↑ 5.5% – UK arm acquires Norway’s OTS.
- Mahindra Lifespace: ↑ 1% – new launch in Malad (West), Mumbai.
- RBI eased provisioning norms for project financiers: Potential gainers: REC Ltd (Rs.398.65) and PFC Ltd (Rs.413.70).
- ABS mandate for 2-wheelers from January 2026 lifted outlook for auto ancillary stocks like Bosch Ltd (Rs.31889.75) and UNO Minda (Rs.1067.95).
IPO Buzz:
- Globe Civil Projects: Subscribed 6.91x on Day 1
- Kalpataru Projects: Subscribed 0.09x
- Ellenbarrie Industrial Gases: Subscribed 0.08x.
- IPO window closes on 26 June 2025 for all three issues.
Technical Outlook:
- Nifty 50:
- Resistance: 25,200 – 25,320 zone
- Support: 24,900 – 24,750 zone
- View: Consolidation likely with a bullish bias if it sustains above 25,000
- Bank Nifty:
- Resistance: 54,250 – 54,500
- Support: 53,400 – 53,100
- View: Positive momentum building; strength in PSU banks evident
Verdict:
The Indian market enters Wednesday’s trade with a cautiously optimistic tone. A steady global backdrop, cooling crude oil, easing volatility, and dovish signals from central banks are positive triggers, though lingering geopolitical uncertainties and profit-booking at higher levels could cap upside in the near term. Focus now shifts to Fed Chair Powell’s second day of testimony, US inflation data, and progress on the Middle East ceasefire.
Strategy: Traders should stay nimble. Use dips to accumulate quality stocks, especially in banks, real estate, and renewables. Maintain trailing stop-losses at key support zones.
Stay tuned. Trade smart. Prosper well.
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