“Inflation is not going to be as transitory as it is being made out to be. It will probably have much more recurring effect and we might see some earnings cut in FY22 as well as FY23. ”

As market continues to touch historical highs, fund managers believe that valuations in many pockets are not reasonable anymore. How should retail mutual fund investors navigate this market?

The Nifty could resume its upmove this week with technical analysts targeting 16,500-16,600 on the index. They advise a buy-on-dips strategy in case the Index slips towards 16,000. Analysts recommend buying shares of Tata Consultancy Services, JSW Steel, and Kotak Mahindra Bank for 5-7 per cent upsides in the short term.

From a technical perspective, the market has made itself stronger, and dragged its support levels higher. There is a breakout visible on the weekly charts as well. Any corrective move or broad consolidation will now see the 15,900-15,950 range play out as key support.

The weekly charts do not present a good picture. Nifty has formed a lower top and bottom on the weekly charts. Importantly, it is still below the rising trend line support that it had violated in the previous week.

The offering aims to provide returns that closely correspond to the returns provided by its benchmark Nifty FMCG TRI Index in the same proportions, subject to tracking errors. The fund will be listed on BSE and NSE.

Exchange traded funds (ETFs) are getting a lot of attention from investors, with the leading stock exchange NSE witnessing listing of 100th such instruments.

The average daily turnover of ETFs on NSE stood at around Rs 265 crore in the current financial year. The number of investors transacting in ETFs has also gone up by 96 per cent from 20.4 lakh in FY20 to 40.1 lakhs in FY21.

According to the fund house, the new scheme would be suitable for investors who are seeking long term capital appreciation and investment in securities covered by Nifty India Consumption Index.

Despite the relentless incremental rise, the market, in general, is also sending out several warning signs. The breadth, or the internal strength of the market, remains weak. The lead indicators continue to show ongoing bearish divergences against the price.

The Nifty Metal Index, comprising 15 stocks led by the likes of Tata Steel, JSW Steel, Hindalco, Vedanta and SAIL, rose from a low of 1,480.7 on March 23, 2020, to a record high of 5,524.25 on May 11 this year. All corrections during this uptrend were characterised by higher highs and higher lows. However, this year, the index corrected to 4,987.25 on May 26 , before bouncing back to 5,421.5 on June 7 before plunging to 4,858.8 on June 18.

For the coming week, the main worry for the market will be its own overstretched technical setup. This, when read along with the precariously low VIX value, raises a red flat for the immediate short term.

​Nifty50 has been marking incremental highs. However, over the past 2-3 sessions, it is lacking the strength that it had earlier, and is showing some signs of fatigue.

The volatility, as represented by INDIA VIX, has fallen another 8.40% and the index currently stands at 15.9400. This is by far its lowest level in recent months. This low point was seen previously only in February 2020.

The Nifty is likely to scale new all-time highs soon as technical indicators point to stability in the market. The index could advance by 1-2% to 15,600-15,700 this week, said technical analysts. The Nifty hit a fresh high of 14,469.65 on Friday before settling at 15,435.65. The Bank Nifty is also likely to reclaim record highs in June, said analysts.

The headline index closed with net gains of 497 points (+3.39%) on a weekly basis to finish on a broadly strong note.

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