What to buy in the stock market this week?
Finance X Opinion
A slow last week!
Last week, the markets started on a positive note but erased all gains and more on Thursday in a 120 points (Nifty) slump. The markets were sideways on Friday and the overall week closed marginally lower for Nifty. Let’s look at some contracts that’ll keep the traders interested this week - and discuss what you should buy, hold and sell!
The drop on Thursday and the overall choppiness in the market is because of weak global financial cues and the threat of Covid wave 3. The curve has started rising in European countries and Mumbai/Kerela. If we’re looking for patterns, this is where the first and the second wave began. This fear has kept the markets in check and investors are quick to realize profits during this instability.
Market to remain bullish!
Last week, Nifty Bank showed a lot of bullishness and ended in the green. HDFC bank, in particular, saw a good upside but couldn’t sustain the 1535 levels and saw selling there. Overall, the daily candles of Nifty did see a Doji being formed on Friday. Altogether, the break of Doji on the downside, i.e., 15640 levels, can trigger a strong sell-off. However, I believe that the markets will start strong and break the upper level of Doji, i.e., 15730 levels, on Monday. The rationale is the strong closure of global markets on Friday.
IPOs
Zomato is all set for the IPO. They’re planning to raise ~INR 9400 Cr through the IPO. GR Infraprojects and Clean Science and Technology will also share their share allotment - I’m sure you must be waiting with anticipation if you have subscribed for them.
Stocks to watch out for
This week, IT giants Infosys, Wipro and Cyient are expected to release their quarterly numbers. If you’re holding them in your portfolio, it might just be a good week, in my opinion. Other companies like L&T and Tata Elxsi will also report their quarterly numbers this week.
Last week, Gold was a critical recommendation which saw some buying over the week. The hospitality and IT sectors were sideways. They continue to be good buying options going into the following week. Reliance is still trading the 1900 to 2200 price range and ITC call options would be a great idea if you’re bullish on the market. I believe Nifty will see newer heights. However, these are just my opinions. Make sure you do your own research before investing!
US troops leave Afghanistan: Is the coast clear for Taliban?
Global Politics
On July 2, U.S. troops that coordinated the 20-year-long war in Afghanistan, departed from the Bagram Air Base, effectively ending their military operations in the country. The troops reportedly left in the dead of night without notifying the Afghans.
This development is part of President Joe Biden’s plan to withdraw American troops from Afghanistan by September 11, the 20th anniversary of the terrorist attack on the twin towers of the World Trade Center and the Pentagon.
Why did the U.S. invade Afghanistan?
Weeks after the September 11, 2001, terrorist attacks, the then U.S. President George W. Bush declared “war on Afghanistan”, which was ruled by the Taliban at the time.
Bush had stated that the Taliban regime had turned down his demand to hand over al-Qaeda leaders, including Osama bin Laden, who plotted the attacks. The US troops quickly overthrew the Taliban and set up a transitional government.
What lies ahead for Afghanistan?
Experts predict that there are 3 possible outcomes of the US leaving Afghanistan:
Taliban and the Afghan government agree to a power-sharing agreement and jointly shape the future of Afghanistan.
The Afghan government, economically backed and militarily trained by the West, holds on to its positions in key cities and the Taliban expands its reach in the countryside.
Taliban takes over the entire country.
It looks like the third scenario is about to become a reality as the Taliban has already started capturing more parts of the country. The Taliban on Friday claimed to be in control of 85 percent of Afghanistan after seizing key border crossings with Iran and Turkmenistan.
More than 1,000 Afghan soldiers have already fled to neighbouring Tajikistan after clashing with Taliban militants. The Taliban is also establishing control over the citizens in different ways. For instance, it has started to impose renewed restrictions on women and mandated that Afghans follow a strict interpretation of Sharia law.
What does Pakistan want?
Pakistan’s ISI (Inter-Services Intelligence) had helped the Taliban capture most of Afghanistan in the 1990s. After 9/11, under US pressure it had to cut formal ties with the Taliban and “join the war against terror”. But Pakistan has been playing a double role. It provided shelter to the Taliban’s Rahbari Shura, a group composed of their top leaders. Now, when the U.S. is leaving and the Taliban is advancing, Pakistan wants to check India’s influence in Afghanistan and bring the Taliban back to Kabul.
From a strategic point of view, Pakistan would prefer the Taliban being back in power. This would also allow Rawalpindi to stabilise its conflict-ridden western border.
However, a violent takeover, like the one in the 1990s, would leave Afghanistan unstable for a foreseeable future. In such a scenario, Pakistan could face another influx of refugees from Afghanistan and the strengthening of anti-Pakistan terror groups, such as the Tehrik-i-Taliban.
Why is India reaching out to the Taliban?
Historically having chosen not to engage, India has now made contact with the Taliban. New Delhi has not denied these reports as well. This signals a late but practical acknowledgement by India that the Taliban would play a critical role in Afghanistan in the coming years.
India has three critical interests in engaging with the Taliban:
Protecting its investments in Afghanistan
Preventing the future Taliban regime from being a pawn of Rawalpindi
Making sure that the Pakistan-backed anti-India terrorist groups do not get support from the Taliban
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