Street signs: Market trend remains bullish, low float, higher price & more

Market trend remains bullish

The benchmark Nifty gained 2.2 per cent last week to end at a four-month high of 10,607. Technical analysts say the Nifty has formed a bullish pattern on the weekly charts and is headed towards 10,700-10,800, which is a key resistance zone. On the downside, it has good support at 10,500-10,400 levels. “The short-term trend of the Nifty continues to be positive. The choppy movement at the upside may continue in the early part of next week. A sustainable move above 10,700 may open up the next upside target of 11,000-11,200 in a couple of weeks,” says Nagaraj Shetti, technical research analyst, HDFC Securities. 

Sundar Sethuraman

Low float, higher price

Shares of IDBI Bank have surged 2.5 times in little over a month. The sharp rally has seen the lender’s market value touch Rs 53,000 crore, ahead of other lenders, such as Punjab National Bank, IndusInd Bank and YES Bank. Market players say the low-free float of IDBI Bank is preventing fair price discovery. Currently, the promoter holding in the bank is 98.1 per cent — 51 per cent held by Life Insurance Corporation and the rest by the government of India. “Investors need to be careful with stocks that have ultra-low float. If the sentiment changes, it is not easy to get an exit in such stocks,” said an analyst, citing the example of Ruchi Soya, which hit five consecutive lower circuits last week after surging 450 times year.

Samie Modak

HDFC Life may see Rs 820-cr ETF inflows

HDFC Life Insurance Company is expected to see inflows of Rs 820 crore from exchange traded funds (ETFs) tracking the Nifty index. The stock will be added to the 50-share benchmark index with effect from July 31. On the other hand, Vedanta, which will be removed from the index, could see outflows of around Rs 400 crore. Given HDFC Life’s higher free-float than Vedanta, it will have a weighting of about 90 basis points (bps), as against the latter’s 44 bps. Shares of HDFC Life rallied 4.4 per cent following the index inclusion news. According to ICICI Securities, ETFs with assets of Rs 91,400 crore track the Nifty 50 index.

Samie Modak