Stock Market Prediction June 22: Will Sensex, Nifty Rebound on Monday?

Can Dalal Street recover on Monday, Juune 22, after Friday’s steep IT slide? Dalal Street finally cooled off on Friday after five consecutive days of rallies on the back of a steep sell-off in the IT pack that pushed down the benchmark indices. Concerns over global technology spending grew after Accenture issued cautious revenue guidance that triggered weakness. Add weak global cues, renewed foreign institutional investor (FII) selling and lingering geopolitical uncertainty to that and investors had enough reasons to book profits.

The big question now is whether Friday’s drop was just a temporary pause or the start of a deeper correction. Market experts say the answer could depend largely on how IT stocks perform at the opening bell on Monday. The tech counters faced heavy pressure, but the broader market held up well, suggesting that the underlying bullish trend is not completely broken.

How Did The Market Finish Friday?

The BSE Sensex slipped 607 points or 0.78% to 76,802.90. The Nifty 50 closed 154.90 points lower or 0.64% at 24,013.10.

Broader markets gave a better show in contrast as frontline indices slumped. The Nifty Midcap 100 gained 0.22 per cent, while the Nifty Smallcap 100 increased by 0.42 per cent. This suggests that buying interest in the market was not limited to large-cap stocks.

Among sectors, the IT index lost the most, slipping by 3.6 per cent. Banking, auto & oil & gas stocks also closed in the red But stocks of pharma, healthcare, chemicals and media managed to end higher, suggesting a shift in sectoral preference and not broad-based selling.

What Caused The Friday Sell-Off?

The major driver in trade seemed to be global IT consultant Accenture’s cut in its revenue forecast, which once again heightened anxiety about global technology spending and triggered broad selling in major Indian tech names. IT heavyweight Infosys was down by 6.75%, TCS was down by 3.55% and Reliance Industries fell 1.40%. The technology heavyweights dragged down the benchmarks across sectors, although a majority ended in the black.

Stock Market Prediction For Monday, June 22

Ankit Jaiswal, Senior Research Analyst at Univest and Kunal Singla, Associate Director at Univest said the Monday market setup remains cautiously positive as long as Nifty continues to trade above the psychologically important 24,000 mark.

The analysts said Friday’s correction largely concentrated in IT stocks and was not broad-based. Banking, consumer and some defence sectors have held up well and this might provide some support to the benchmark index if tech stocks stabilise.

Bank Nifty futures closed with a premium of around 123 points, suggesting traders are still upbeat despite Friday’s volatility.

Key Levels To Watch On Monday

Nifty’s immediate and significant support level is still at 24000, said experts. According to experts, holding above the crucial level would protect the short-term upward bias; conversely, breaching the first support around 23,947 might raise the risk of a sharper correctional move towards 23,852.

Stocks That May Stay In Focus On Monday

IT stocks remained under pressure but a few heavyweight stocks showed resilience on Friday.

The top gainers were:

Eternal: +2.22%
Sun Pharma: +0.74%
Larsen & Toubro: +0.46%
ICICI Bank: +0.31%
Bajaj Finance: +0.31%

Some of the laggards that closed with losses were Infosys, TCS, SBI, Tata Steel and Axis Bank. The broader market could gain ground with support from banking and consumption stocks if the selling pressure in Infosys and TCS decreases, say Univest analysts.

What Will Move Dalal Street On Monday?

A host of global and domestic factors will determine the direction of the market at the start of the new trading week.

First, the performance of US markets will be important, particularly whether global technology stocks bounce back after Friday’s weakness.

Secondly, investors will look to see if Indian IT stocks find support after their steep correction.

Crude oil prices will also be in focus. Oil prices are under pressure due to hopes of a possible US-Iran deal. The development is positive for India on the whole as it helps ease inflation concerns and supports oil marketing companies.

With no major domestic economic events scheduled, global cues are likely to play a bigger role in determining market sentiment on Monday.

Should Investors Be Worried?

As for now, analysts are unlikely to perceive Friday’s drop as a trend reversal. Though benchmarks corrected sharply, wider markets held firm, volatility remained on a leash, and Bank Nifty futures continued to trade at a premium. The signs, indeed, indicate that investors are not yet driven by a risk-averse emotion.

In the near term, IT stocks need to cool off.

If IT stocks cool down, then Nifty may try to inch towards 24,093, said Ankit Jaiswal & Kunal Singla of Univest. However, a fresh bout of selling may again test levels around 23,947 before fresh buying emerges.

(Disclaimer: This article is for informational purposes only and should not be considered investment advice. The views, opinions, and recommendations expressed herein are those of the respective experts. Readers are advised to consult a qualified financial advisor before making any investment decisions.)

Also Read: Weekend On Dalal Street: Sensex Holds 1.7% Gains Despite Tech Sell-Off; US-Iran Deal, IT Shock, Crude Crash & IPO Buzz- What Investors Should Know

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