Akash Jha
Poor monsoon, rupee depreciation, and elevated Indian inflation figures dampened investor sentiment in the fourth consecutive week of the truncated week. On the global front, investors were weighed down by soaring US bonds, a rising dollar, fears of a Fed rate rise, and slowing Chinese demand.
This week, the BSE Sensex decreased 0.57 percent, or 373.99 points, to finish at 64,948.66, while the Nifty50 decreased 0.60 percent, or 118.1 points, to end at 19,310.20.
The BSE Small-cap index ended on a flat note, while the BSE Large-cap index declined 0.7% and the BSE Mid-cap index fell 0.5%.
“Sensex and Nifty fell this week due to weakness in the majority of global equity markets.” The BSE Mid-cap and BSE Small-cap indices experienced a reversal. The majority of sectoral indices posted negative returns. BSE Metals, BSE Energy, and BSE Oil & Gas are among the sectoral indices that underperformed the broader markets, according to Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities.
“Weak monsoon conditions prevailed across the majority of India in August, culminating in a deficient monsoon. In July 2023, India’s consumer price index (CPI) inflation increased to 7.4% (from 4.8% in June 2023), as a result of rising vegetable prices. This week, the price of Brent crude oil experienced a correction, but it remains above the price range observed a few months ago. Consumption demand weakened in the first quarter of fiscal year 24; however, investment demand remained robust. Additionally, Q1FY24 results demonstrated a further increase in profitability,” he added.On the sectorial front, the BSE Metal index fell 4%, the BSE Telecom index fell 2%, the BSE Oil & Gas index fell 1.2%, and the BSE Power index rose 0.5%.
The BSE Small-cap index concluded on a note of parity. Hindustan Oil Exploration Company, Rico Auto, Sree Rayalaseema Hi Strength, Lloyds Steels Industries, Universal Cables, GE Power India, Pix Transmissions, and Globus Spirits all experienced losses ranging from 12% to 32%.
Companies like Johnson Controls -Hitachi Air Conditioning India, Ddev Plastiks Industries, Balaji Telefilms, and Digispice Technologies increased from 21% to 42%, while others like DB Realty, Cochin Shipyard, BF Utilities, Garden Reach Shipbuilders & Engineers, and Digispice Technologies all grew by 21%.
There was a period of heightened risk for Indian stock markets last week as investors fled to the safety of the US dollar and other haven assets in response to negative global and domestic indicators. Domestic industrial production disappointment, negative wholesale inflation, and rising CPI inflation all played roles in the market’s unpredictability. Stronger-than-expected US retail sales data added to worries about a Fed rate hike, downgrades of US bank creditworthiness, and an unexpected rate cut by China’s central bank, according to Vinod Nair, Geojit Financial Services’ Head of Research.
“Rising US bond yields are expected to discourage overseas investment in India, which will have further repercussions on market dynamics. The market did not expect a rate move due to weak core inflation and volatile July retail CPI data. This week’s losses were concentrated in the metals industry on the back of disappointing manufacturing statistics and fears of a slowdown in Chinese demand. He continued, “Investor mood is muted as a result of the significant volatility of the global currency market, leading to a large depreciation of EM currencies, which affects the performance of equities.
For the fourth week in a row, foreign institutional investors (FIIs) were the net sellers, with a total of Rs 3,379.31 crore in equity sales, while DIIs acquired a net of Rs 3,892.3 crore to make up the difference. So far this month, FIIs have sold shares worth Rs 10,925.84 crore, while DIIs have bought shares worth Rs 9,245.86 crore.
Where is Nifty50 headed?
Amol Athawale, Vice President – Technical Research, Kotak Securities:
The Nifty has produced a lower top on daily and intraday charts, and a small bearish candle on weekly charts, both of which are highly bearish. The 50-day simple moving average (19250/64750) has been providing continuous support on the downside. Only if the index breaks below the 50 day simple moving average (or the 19250 level) might we expect to see a new round of selling, with potential lows in the 19200s and low 1910s.
On the flip hand, 19400 represents a significant barrier for buyers, and a break over that level may send the index soaring to 19450–19500. Weak mood towards Bank Nifty is anticipated to persist until the time the index is trading below 44100. It could drop to the 43500-43200 range if it goes lower. However, if it rises beyond 44100, it might continue climbing to between 44400 and 44600.
Jatin Gedia – Technical Research Analyst at Sharekhan by BNP Paribas:
The Nifty has shown signs of weakness on the daily charts, as it has closed below the 40-day moving average (19358). The recent decline in the Nifty has caused it to close in the red for the fourth week in a row, and a negative crossing in the weekly momentum indicator has signalled the onset of deterioration on a higher time frame. As a result, the downturn from the lower top lower bottom formation is still in effect. We anticipate that the Nifty will fall to around the 19100 mark.
The Bank Nifty index has now ended trading in the red for the sixth session in a row. It has hit the 20-week moving average (around 43800), therefore the drop from here could not be that steep. While oversold and showing signs of divergence on the hourly charts, the current downward trend still has to be verified by the price. Weakness is likely to persist till the Bank Nifty closes trading below 44000. A drop to around 43500 is possible.
Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services:
Without a positive trigger and with persistent selling by FIIs, markets have been consolidating. We anticipate local and global markets to remain under pressure next week due to Fed Chair Powell’s speech and additional global macro data. Additionally, RBI’s meeting minutes would be made public on Thursday. However, trading activity and sector shifts are expected to persist in the market as a whole. Weighty in the Index Jio Financial Services is scheduled to go public on Monday, thus Reliance could be in the spotlight.
Moneypoise.com experts’ opinions and investment advice are their own, not those of the website or its administration. Moneypoise.com recommends that customers seek the advice of professionals before making any financial commitments.
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