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Markets extended rebound in the passing week and posted decent gains, tracking favourable cues. Factors like easing in the crude and commodities prices combined with a rebound in the global indices boosted sentiment. Consequently, both benchmark indices, Sensex and Nifty, ended with strong gains of 3% each to close at 54,481.84 and 16,220.6 levels respectively. The buoyancy was widespread but the banking and financials deserve special mention, which finally pitched in to support the recovery. The broader indices, midcap and smallcap, also ended with healthy gains of 3.9% and 3 % respectively. 

In the coming week, participants will first react to the TCS and Dmart numbers. Besides, macroeconomic data viz. IIP and CPI on July 12 and WPI on July 14 will be in focus. Apart from the domestic factors, global cues like the performance of the US markets, crude movement, etc will remain on the radar. 

On the earnings front, stocks like ACC, HCL Technologies, Jindal Steel and Power, Mind Tree, Tata Elxsi, Federal Bank, and HDFC Bank will announce their numbers during the week along with several others. 

The last three weeks of the rebound have certainly eased some pressure but cues are still mixed, which continue to trigger erratic swings in between. Apart from the US recession worries, participants should brace themselves for volatility owing to the earnings. Amid all, indications are favourable for a further rebound in the index and the Nifty could test the 16,500 zone while the 15,650-15,900 zone would provide the cushion, in case of any dip.  We reiterate our preference for auto and FMCG pack and suggest nibbling selectively in the banking and financial space. On the flip side, while we may see some rebound in the energy and metal pack too, the overall structure still looks weak to us. Participants should align their positions accordingly without losing focus on risk management.  

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