The equity market uptrend was primarily bolstered by declining oil prices, positive domestic PMI data, and the Monetary Policy Committee’s decision to maintain the status quo in the repo rate. However, the RBI continues to consider inflation a significant risk, and its tone was hawkish on Friday when it announced open market operations (OMO) to manage liquidity, which resulted in a substantial increase in the yield on 10-year bonds. Gains were constrained by the substantial FII outflow caused by elevated US bond yields and the US dollar index.

During the week, the BSE Sensex increased by 167 points to 65,996, the Nifty50 rose by 15 points to 19,654, and the Nifty Midcap 100 index declined by 0.6 percent, whereas the Smallcap 100 index increased by 0.7 percent. Pressure was felt on the automotive, banking, energy, pharmaceutical, and oil & gas sectors, while technology and real estate equities trended higher.

“A stronger dollar index and rising US bond yields have deterred foreign investors, resulting in market weakness.” “Additionally, strong employment figures from the United States this week have sparked apprehension regarding a possible interest rate hike by the Federal Reserve, as evidenced by the surge in US bond yields that suggests an imminent interest rate hike,” said Vinod Nair, director of research at Geojit Financial Services.

Additionally, he stated that the market has been affected by the RBI’s hawkish posture, especially in its management of liquidity to combat inflationary risks. Nevertheless, the market has received some solace from robust domestic PMI data and corrections in crude oil prices.

He believes that starting next week, the focus will shift to quarterly results from the IT and finance industries.

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Here are 10 key factors to watch out for:

Corporate Quarterly Earnings

CPI Inflation

The CPI inflation rate for September, which is released on October 12, will also be closely monitored by market participants in addition to earnings. As a result of the decline in LPG and vegetable prices, the CPI inflation rate, which is a crucial metric for the MPC, is anticipated to further decline.

“Since August, when it was 6.8 percent year-over-year, we estimate that CPI inflation decelerated significantly in September to 5.3 percent, returning to the RBI’s target range of 2-6 percent after a two-month absence.” According to Rahul Bajoria, MD & Head of EM Asia (ex-China) Economics at Barclays, the headline rate probably declined due to a reduction in food and petroleum prices. Bajoria further stated that core inflation probably remained stable, enabling the RBI to maintain policy rates unaltered.

Furthermore, reports on foreign exchange reserves for the week ending October 6 and industrial output data for August are scheduled to be disseminated on October 13 and October 12, respectively. These reports pertain to the months of September and balance of trade and WPI inflation.

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FOMC Minutes & US Inflation

Global investors will closely monitor the FOMC minutes for the September policy meeting, which will be released on October 11th, and US inflation, which is scheduled for October 12th, as well as the upcoming speeches of several Fed officials.

Inflation, an essential data point for the Federal Reserve to consider when determining the fed funds rate, is expected to moderate in September from August’s 3.7 percent to August’s 3.6 percent, but to remain well above the Fed’s 2 percent target. Fed officials estimate inflation to reach 2.6% by the end of 2024 while ruling out a severe recession, as indicated by the Fed’s decision to leave interest rates unchanged at its September meeting. August’s core inflation rate was 4.3%, down from 4.7% the previous month.

China will also disclose its September inflation data. In August, the inflation rate was 0.1%.

Global Economic Data Points

Here are key global economic data points to watch out for:

FII Flow

Foreign institutional investors sold a net Rs 8,400 crore worth of shares in the cash segment during the previous week as the US 10-year Treasury yield rose to a 16-year high and the US dollar index reached its highest level since November of last year. Domestic institutional investors were able to offset the FII outflow, but the outflow may persist until US bond yields and the dollar index cool down, according to experts.

In the first week of October, DIIs net bought shares worth Rs 4,400 crore, while the US 10-year Treasury yield concluded the week at 4.8% and the US dollar index at 106.10.

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Oil Prices

As India is a net oil importer, the sharp decline in oil prices from a 10-month peak was positive for the Indian equity markets. Oil prices were affected during the week by rising US bond yields, a strengthened dollar, and global demand concerns. International benchmark Brent crude futures corrected by 8.26 percent during the week, the largest weekly loss since March, to settle at $84.58 a barrel, continuing downtrend for third consecutive week from the high of $95.96 a barrel.

After a precipitous decline in price, Saumil Gandhi, senior analyst – commodities at HDFC Securities, expects the crude oil price to consolidate in a lower-end range with a negative bias.

Technical View

The Nifty50 exhibited a strong recovery after defending the 19,300 level and ended a two-week losing trend. On the weekly charts, the index has formed a bullish candlestick pattern with a small body, a long lower shadow, and a small upper shadow, resembling a Hammer candlestick pattern, which is a bullish reversal pattern. This raised prospects for northward journey in coming sessions, which if comes true in following trade then 19,800-20,000 can’t be ruled out with crucial support at 19,600-19,300 area, experts said.

In the recent past, Nifty failed to surpass the short-term moving average (20 exponential moving average established at 19,670) and is currently hovering in the same region. A decisive close above 19,670 could help the index extend its rebound to the 19,800-20,000 range, according to Ajit Mishra, vice president of technical research at Religare Broking.

On the downside, he believes the region between 19,200 and 19,450 would continue to provide support in the event of a reversal.

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F&O Cues, India VIX

The Options data also indicated that the Nifty may encounter significant resistance between 19,900 and 20,000, with crucial support between 19,600 and 19,500.

According to weekly options data, the highest Call open interest (OI) was at the 20,000 strike, followed by the 20,500 and 19,900 strikes, with the most significant Call writing at the 20,500 strike, followed by the 20,000 and 19,900 strikes.

On the Put side, the highest open interest was recorded at the 19,500 strike, followed by the 19,600 and 19,000 strikes, with writing occurring at the 19,600 strike, followed by the 19,000 and 19,500 strikes.

During the previous week, volatility moderated substantially, providing solace to the bulls. The India VIX, which measures the expected volatility of the Nifty50 over the next thirty days, decreased by 10% from 11.45 to 10.3, the lowest level since July.

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IPO

The primary market appears to be experiencing a deceleration in activity, as only one initial public offering (IPO) is scheduled to commence subscriptions the following week. In the SME segment, Arvind and Company Shipping Agency of Gujarat will open its Rs 14.74-crore public offering from October 12-16 at an offer price of Rs 45 per share, whereas Committed Cargo Care will conclude its IPO on October 10.

In the mainboard segment, Plaza Wires, a wires manufacturing company based in Delhi, is scheduled to commence trading on the bourses on October 13. Arabian Petroleum, a manufacturer of lubricants, and E Factor Experiences, an event management firm, are both expected to list their shares on the NSE Emerge on October 9, in accordance with the IPO schedule.

On October 10, among others, City Crops Agro and Goyal Salt & Kontor Space will make their debuts on the BSE SME. On October 11, Oneclick Logistics India and Canarys Automations are scheduled to list their shares on the NSE Emerge.

Additionally, on October 12, Vivaa Tradecom is scheduled to commence trading on the BSE SME. On the same day, Vishnusurya Projects and Infra, Sharp Chucks and Machines, and Plada Infotech Services will all make their debuts on the NSE Emerge. Moreover, as of October 13, Karnika Industries will be listed on the NSE Emerge.

According to the IPO schedule, Sunita Tools shares are expected to be listed on the BSE SME on October 9; however, no circular from the exchange has been issued as of yet.

Also read :- RBI Policy | Higher for longer remains relevant not only for the world but also for India, says Indranil Pan

Corporate Action

Here are key corporate actions taking place next week:

Disclaimer: The opinions and investment recommendations put forth by investment specialists on Moneypoise.com are purely their own and do not reflect the stance of the website’s administration or its staff. Users are encouraged to consult certified experts prior to making investment decisions, as stated on Moneypoise.com.

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The Nifty50 rose 1.97 percent or 384.7 points this week to settle at 19,820, while the BSE Sensex rose 1.85 percent or 1,211.75 points to conclude at 66,598.91.

The broader indexes continued to excel this week, with the BSE Mid-cap index climbing 4%, the BSE Small-cap index growing 2.2 percent, and the BSE Large-cap index rising 2%.

“The domestic indices gradually rallied throughout the week, buoyed by strong macroeconomic data such as robust GDP and PMI figures, which painted a positive picture for the market.” Despite a mixed global trend characterized by poor indications, Indian shares have remained resilient, bolstered by this strong economic outlook,” said Vinod Nair, Head of Research at Geojit Financial Services.

Crude oil price increases, US unemployment claims statistics for August, disappointing Chinese service PMI and trade figures, and rising gas costs due to strikes in Australia stirred global alarm. However, despite their relatively high valuations, mid- and small-cap stocks drew substantial purchasing activity in the overall market. Furthermore, increased order inflows made sectors such as infrastructure and real estate particularly appealing to investors during the week.

“The market is now eagerly awaiting inflation and industrial production data to provide further guidance,” he said.

All sectoral indices finished in the green, with the BSE Realty index and BSE Capital Goods index each up 5%, the BSE Energy index up 4.7 percent, and the BSE Power index up 4.7 percent.

The BSE Small-cap index increased by 2.2 percent. MMTC, GTL Infrastructure, National Peroxide, Cochin Shipyard, Bombay Burmah Trading Corporation, Magadh Sugar & Energy, GMR Power, SpiceJet, Vikas WSP, Ashapura Minechem, Transformers and Rectifiers India, and Sadhana Nitrochem all increased their stakes by 21 to 50 percent.

“Both the Nifty and the Sensex gained around 2% and outperformed the majority of global equity markets.” Mid-cap and small-cap indices surpass the large-cap index. Macro emotions remained unpredictable as European and US bank flaws were highlighted. “Indian equity markets remain concerned about a slowdown in growth, higher interest rates, and valuation, even as inflation (particularly food inflation) remains elevated both globally and domestically,” said Shrikant Chouhan, Head of equities Research (Retail), Kotak Securities.

“The majority of indices finished in the green. During the week, FPIs/FIIs were net sellers while DIIs were net buyers. GST collections for July (collected in August) were 10.8 percent higher year on year at Rs 1.59 trillion (June: Rs 1.65 trillion).”

US Treasury yields dipped on Friday as investors worried about the likelihood of additional interest rate hikes in the wake of new economic data. Initial weekly jobless claims were 216,000 on Thursday, less than the 230,000 forecast. The Eurozone’s economy expanded by 0.1 percent in April-June compared to the previous three months, a lower rate than previously projected, and by 0.5 percent year on year after expanding by more than 1% last year. In Asia, China’s exports decreased 8.8 percent year on year in August, while imports declined 7.3 percent,” he noted.

This week, foreign institutional investors (FIIs) sold shares worth Rs 9,321.41 crore, while domestic institutional investors (DIIs) acquired shares worth Rs 4,572.14 crore.

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Where is Nifty50 headed?

Jatin Gedia – Technical Research Analyst at Sharekhan by BNP Paribas:

On the hourly chart, Nifty has reached the upper boundary of the ascending channel; consequently, a consolidation is likely to occur in the coming week. The likely range of consolidation is between 19850 and 19670. The daily and hourly momentum indicators have a positive crossover, which is a buy signal. Therefore, this is likely only a consolidation, and any dip should be viewed as a purchasing opportunity.

On the upside, we anticipate 19900, which is close to the swing high reached in July. In terms of price levels, 19630 – 19670 will serve as a crucial support zone, whereas 19860 – 19900 will serve as an immediate resistance zone.

Amol Athawale, Vice President – Technical Research, Kotak Securities:

After a promising reversal formation, the Nifty has maintained a higher bottom formation and is trading comfortably above the 50-day and 20-day SMA, which is largely bullish. In addition, it has formed a long bullish candle on weekly charts, which supports a continuation of the present uptrend.

For trend-following traders, the key support levels would be 19700 to 19650, and above those levels, the price could rise to 19900. Further gains could push the market to 20,000. In contrast, below 19650, the uptrend would be susceptible to a correction until the 50-day simple moving average or 19550-19500 levels.

Also read :–India and US resolve final WTO dispute, strengthen bilateral trade relations

Disclaimer: The opinions and investment advice expressed by experts on moneypoise.com are their own and do not reflect the views of the site or its management. moneypoise.com advises users to verify with certified experts before taking any investment decisions.

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According to Shrikant Chouhan, Head of Research (Retail) at Kotak Securities Ltd., this has prompted foreign institutional investors to abandon emerging market equities, such as India, and park funds in safe haven US securities. In addition, macroeconomic unpredictability and rising U.S. bond yields may keep markets volatile in the coming week. According to Shrikant Chouhan, Head of Research (Retail) at Kotak Securities Ltd., this has prompted foreign institutional investors to abandon emerging market equities, such as India, and park funds in safe haven US securities.

In addition, the weak monsoon in August and its asymmetrical spatial distribution may keep inflation elevated, and this is becoming a source of concern that is impacting market sentiment. Chief Investment Strategist at Geojit Financial Services, V K Vijayakumar, stated that this may also affect FPI investments. According to data from depositories, Foreign Portfolio Investors (FPIs) have invested a net quantity of Rs 10,689 crore in Indian equities this month (as of August 26).

This figure encompasses investments made through the primary market as well as bulk transactions, which have gained momentum in recent months. Prior to this investment, FPIs had invested more than Rs 40,000 crore each in Indian equities over the previous three months. Prior to this investment, FPIs had invested more than Rs 40,000 crore each in Indian equities over the previous three months.

July’s net inflow amounted to Rs 46,618 crore, compared to Rs 47,148 crore in June and Rs 43,830 crore in May. Prior to that, the inflow was 11,631 crore rupees in April and 7,930 crore rupees in March, according to data from the depositories. The lower amount of net inflow this month could be attributed to FPIs adopting a wait-and-see stance ahead of the scheduled event at Jackson Hole to gain additional insights on the upcoming monetary policy by the US Federal Reserve, according to Himanshu Srivastava, Associate Director – Manager Research at Morningstar India. The lower amount of net inflow this month could be attributed to FPIs adopting a wait-and-see stance ahead of the scheduled event at Jackson Hole to gain additional insights on the upcoming monetary policy by the US Federal Reserve, according to Himanshu Srivastava, Associate Director – Manager Research at Morningstar India. The next meeting of the Federal Open Market Committee (FOMC) is set for September 19-20.

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In addition, higher crude oil prices and a resurgence of inflation risks, as well as a rise in US bond yields, would have prompted some foreign investors to move away from hazardous markets in favor of the greater certainty and superior risk-reward profile offered by US treasuries, according to Srivastava. In addition, higher crude oil prices and a resurgence of inflation risks, as well as a rise in US bond yields, would have prompted some foreign investors to move away from hazardous markets in favor of the greater certainty and superior risk-reward profile offered by US treasuries, according to Srivastava.

In addition, the recent rally in Indian equity markets may have caused its valuation to exceed the comfort level of a few investors, he added. “The velocity of FPI investments is affected by the expectations of endowments and pension funds that sponsor them. With the US 20-year bond rate at 4.65%, FPIs’ propensity to invest in riskier Indian equities could be dampened, as these funds typically aim for a return of around 6%, according to Mayank Mehraa, smallcase Manager and Principal Partner at Craving Alpha. “The velocity of FPI investments is affected by the expectations of endowments and pension funds that sponsor them. With the US 20-year bond rate at 4.65%, FPIs’ propensity to invest in riskier Indian equities could be dampened, as these funds typically aim for a return of around 6%, according to Mayank Mehraa, smallcase Manager and Principal Partner at Craving Alpha.

Also Read:-Primary market schedule | 4 IPOs to be launched, 6 listings next week

This reluctance stems from the availability of secure investments that offer comparable returns without the higher risks associated with equity investments. Consequently, while FPI investments continue, their moderation reflects the intricate interplay of global market dynamics, investor preferences, and potential returns, he added. During the time period under review, FPIs also invested Rs 5,950 crore in the country’s debt market in addition to equity investments. During the time period under review, FPIs also invested Rs 5,950 crore in the country’s debt market in addition to equity investments. To date, FPIs have invested a total of Rs 1.37 lakh crore in the equity market and Rs 26.44 lakh crore in the debt market. FPIs consistently acquire capital products across all industries.

Recently, they have also begun selling financials. FPIs consistently acquire capital products across all industries. Recently, they have also begun selling financials.

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Disappointing industrial production for June, a larger-than-anticipated increase in CPI inflation, fears of a likely additional rate hike by the Fed in light of strong retail sales data, currency depreciation versus the US dollar, rising US bond yields exerting pressure on FII flow, and a slowing Chinese economy all weighed on market sentiment.

According to experts, consolidation may persist with a negative bias in the coming week, with the focus on Powell’s speech, MPC policy minutes, FII sentiment, and global equity market activity.

The Nifty50 fell 118 points to 19,310 and the BSE Sensex fell 374 points to 64,949 as metal, banking & financial services, technology, oil & gas, and pharmaceutical equities weighed on the markets.

We expect domestic and global markets to remain under pressure next week due to Fed Chair Powell’s speech and the release of additional macroeconomic data, according to Siddhartha Khemka, chief of retail research at Motilal Oswal Financial Services.

However, he anticipates that the action will persist in the broader market alongside sector rotation.

Here are 10 key factors to watch out next week:

Jio Financial Services Listing

On August 21, the entity demerged from billionaire Mukesh Ambani-led Reliance, Jio Financial Services (formerly known as Reliance Strategic Investments), will be listed on the exchanges, drawing investor attention to the index heavyweight Reliance Industries (RIL).

Reliance’s financial services division is now worth Rs 261.85 per share following the spin-off last month.

On August 23, Jio Financial Services will join the MSCI Global Standard Index after already being included in the FTSE Indices.

MPC Meeting Minutes

In addition, on August 24, all attendees can find the minutes from the MPC’s August 10 meeting. After the Reserve Bank of India raised its Consumer Price Index inflation forecast for FY24 (to 5.4% from 5.1% earlier) due to the spike in food prices, experts believe the rate cut cycle will be pushed into FY25 instead of the fourth quarter of FY24. The Consumer Price Index increased by 7.44 percent in July, which was above market forecasts of a 4.87 percent increase.

Jackson Hole Symposium

The entire world will be listening to Federal Reserve Chair Jerome Powell’s remarks at the Jackson Hole economic policy conference on August 24-26. On August 25th, Powell will give a speech at an event organised by the Kansas City Fed. As the Fed remains firmly committed to bringing inflation back down to its 2% goal and continues to take a data-dependent approach in determining the extent to which additional policy firming may be appropriate going forward, Powell has already hinted at one more rate hike in upcoming policy meetings. Inflation in July was 3.2% according to the CPI and 4.7% according to the core CPI.

As a result, all eyes will be on his comments for any clear signals about when the current cycle of rate hikes might come to a stop and a new period of rate cuts might begin.

Here are key global economic data points to watch out next week:

FIIs Mood

The major reason for the FII outflow from emerging markets like India in August, after significant buying in the previous three months, is the rise in the US dollar index to 103.43 (from below the 100 mark in mid-July) and in US 10-year treasury yields to 4.25 percent (from 3.8 percent in mid-July). Despite the best efforts of DIIs to counteract the FII outflow, experts predict that the selling by FIIs will continue in the near future.

While foreign institutional investors (FIIs) net sold shares worth Rs 3,379 crore last week, bringing their monthly outflow to nearly Rs 11,000 crore in the cash segment, domestic institutional investors (DIIs) were able to more than make up for the FII outflow by buying shares worth Rs 3,892 crore last week, bringing their net buying for the month to around Rs 9,250 crore.

Indian Rupee

The Indian rupee’s performance will also be closely monitored by traders, as it recently set a record low of 83.42 versus the US dollar and a record closing low of 83.12 last week (on weekly basis) due to rising oil prices and the US dollar index. The rupee has been weak for four weeks running due to factors including profit taking in the stock market and FII outflow, and this trend is expected to continue in the days ahead.

We anticipate the Rupee will trade with a negative bias due to widespread fear in international markets and the Dollar’s general strength. Research analyst at Sharekhan by BNP Paribas, Anuj Choudhary, warned that a rise in crude oil prices could have a negative impact on the rupee.

On the other hand, he thinks that the rupee might be supported at lower levels by the Reserve Bank of India.

Domestic Economic Data Points

On the domestic data front, the foreign exchange reserves for the week ended August 18 will be announced on the same day as the bank loan and deposit growth figures for the week ended August 11.

Technical View

The Nifty50 made lower highs for the fourth week in a row and closed at its lowest level since the last week of June on a weekly basis, but it held above its 50-day EMA (exponential moving average), which corresponds with its 10-week EMA (exponential moving average) on an intraday basis, and above its closing level of 19,300. Therefore, the 19,300-19,250 zone is anticipated to be important for further fall into the psychological 19,000 mark, while the 19,400-19,500 zone is predicted to act as a barrier to the upside.

“Nifty has respected the short term moving average i.e. 50-day EMA twice of late, which currently lies around 19,250 and its break could push the index to 19,100 first, and then to the 18,900 level,” Ajit Mishra, SVP – technical research at Religare Bros., said.

In the event of a reversal, he sees resistance between the 20-day EMA and the 19,650 mark.

F&O Cues

According to the Option data, the range of 19,400-19,500 represents major resistance in the upcoming trading sessions, while the range of 19,300-19,200 represents key support.

Weekly Call open interest peaked at the 19,400 level, followed by the 19,500 level, with significant writing at the 19,400, 19,300, and 19,600 levels, while Put open interest and writing peaked at the 19,300 and 19,200 levels, respectively.

The India VIX rose 5.4% throughout the week, finishing at 12.14 levels, the highest level since the third week of May. This is the third consecutive week that volatility has increased. Additional street caution may be warranted if the VIX rises above the 13.5–14 range , experts said.

IPO

Aeroflex Industries, a manufacturer of flexible flow solution products, will open its Rs 351-crore IPO from April 22-24 at a price band of Rs 102-108 per share, and the infrastructure company Vishnu Prakash R Punglia will launch its Rs 309-crore maiden public issue on August 24 at a price band of Rs 94-99 per share, so the primary market will remain active next week as well.

According to the IPO schedule, on August 22 Pyramid Technoplast will complete its Rs 153-crore IPO, and on August 23 TVS Supply Chain Solutions will make its debut on the bourses.

Also Read : Mcap of seven of top 10 firms declines by Rs 80,200 cr; TCS, HDFC Bank biggest laggards

Sungarner Energies, a provider of power solutions, will begin accepting subscriptions for its initial public offering (IPO) on April 21–23 at an offer price of Rs 83 per share; Shoora Designs will end its IPO on August 21; Crop Life Science and Bondada Engineering will both end their IPOs on August 22; and so on. Next week, on August 23, Shelter Pharma shares will be listed on the stock market.

Corporate Action

Here are key corporate actions taking place next week:

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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%.

Also Read : Moody’s affirms India’s Baa3 rating, but warns of political tensions

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The BSE Sensex gained 481 points, closing at 65,721, while the Nifty50 rose 135 points, closing at 19,517, and forming a bullish candlestick pattern.

“Last week’s low was at 19,296 levels, so a break there would signal a decline to 18,838. Nifty currently stands at a pivotal point in its development. According to Ashish Kyal, CMT, Founder & CEO of Waves Strategy Advisors, any directional move would likely take place after next week’s rangebound move between 19,290 & 19,800 levels.

A break of this range, in his opinion, would signal a significant shift in the market. He suggested using a mild Options approach for range bound or consolidation movement during these periods.

The Nifty Midcap 100 and the Nifty Smallcap 100 both rose by 0.8 percent on the back of this optimistic market breadth, indicating strong purchasing activity across the board.

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This week, both the BSE Sensex (down 0.66 percent, or 438.95 points), and the Nifty50 (down 0.65 percent, or 129.05 points), finished at lower numbers than their previous weekly closing levels.

The BSE SmallCap Index increased by 1.5%, the BSE MidCap Index ended unchanged, and the BSE LargeCap Index decreased by 0.6%.

“The week started off on a hopeful note, with expectations that the policy-tightening era can come to an end as a result of falling inflation rates around the world. However, Vinod Nair, Head of Research at Geojit Financial Services, noted that “worries across the globe were triggered by negative news regarding the US rating downgrade, weak factory activity data from the Eurozone and China, and prolonged FII selling triggered by rising US bond yields.”

“As fears about the state of the US economy grew, investors fled to the dollar in search of safety, sending the dollar index soaring. Nonetheless, domestic markets rebounded from the effect of weak global cues, with IT and healthcare sectors leading the way in terms of strong domestic results.

While manufacturing in India remained strong in July, it slowed for the second consecutive month. Conversely, thanks to an increase in new orders, especially from outside, the domestic service PMI surpassed market expectations and hit a 13-year high. Nair remarked, “Investors are waiting for the next MPC meeting to see if the RBI will maintain its policy rate at 6.5 percent.”

The Nifty Realty index plummeted 4.2%, the Nifty PSU Bank index fell 4.0%, the Nifty FMCG index lost 1.7%, the Nifty IT index jumped 3.0%, and the Nifty Pharma index rose roughly 2%.

Lloyds Steels Industries, Digispice Technologies, MPS, Optiemus Infracom, Sanghi Industries, Jai Balaji Industries, HCL Infosystems, Udaipur Cement Works, WPIL, and Dilip Buildcon all contributed to a 1.5 percent increase in the BSE SmallCap index.

Bajaj Hindusthan Sugar, Equitas Small Finance Bank, Tracxn Technologies, Sintex Plastics Technology, MSP Steel & Power, Ador Welding, Thangamayil Jewellery, Redington, Shivalik Bimetal Controls, Bhagiradha Chemicals and Industries, and Sintex Plastics Technology all saw their share prices drop by 10-15%.

Nifty found some relief at the end of a turbulent week by climbing back above the 19,500 level. The IT sector sparked the recovery, but the BFSI sector, which was hit the worst, carried it ahead and restored optimism in the market. Keep in mind that we haven’t made it through this ordeal unscathed. For the first time since March 31, 2023, we are technically positioned below the 20-day EMA (exponential moving average) for the Nifty. Therefore, unless the Nifty closes over 19,550-1,600, complacency is not warranted. Angel One’s Head of Research, Technical and Derivatives, Sameet Chavan, advised, “It’s best to avoid aggressive trades.”

If there are further unusual events on a global scale, the Nifty could test the 19,400-19,300 zone again. If prices drop below this level, they could face more selling pressure and head towards the next key area between 19,000 and 18,800.

For the positive scenario to come to fruition, it is essential to get over 19,600, and all international trends must cease entirely. The market’s mixed signals for the week’s close suggest taking things slowly for the time being. Chavan also expressed hope that the present downturn would not be prolonged for too much longer, and that the fabled 20,000 mark would be reached soon.

While domestic institutional investors (DIIs) bought shares worth Rs 5,617.33 crore this week, foreign institutional investors (FIIs) sold shares worth Rs 3,545.64 crore.

Where is Nifty50 headed?

According to Rupak De, Senior Technical Analyst at LKP Securities, the Nifty dropped significantly after the US credit rating was lowered from AAA to AA+, resulting in a breakdown from the recent consolidation on the daily timeframe. The index has fallen below the 21-day EMA for the first time since March 29 due to the recent decline. 19 300 individuals served as immediate support. On the upside, however, 19,566 is likely to function as a significant resistance level.

As long as the Nifty stays below 19,566, sentiment is likely to remain negative. In contrast, a decisive rise above 19,566 could propel the index to 19,700–19,750. A failure to advance above 19,566 could trigger selling pressure, however.

According to Jatin Gedia, a Technical Research Analyst at Sharekhan by BNP Paribas, the Nifty was able to recoup some of its losses in the final trading session of the week, following severe selling throughout the week. On a weekly basis, however, it has closed in the red for the second week in a row. The pullback is likely to stall in the 19,560–19,600 range, where the 40-hour moving average and the hourly upper Bollinger band provide resistance. Therefore, this rebound should be marketed to.

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The hourly momentum indicator has also reached the equilibrium line, indicating that the retreat is complete and can commence a new downward cycle. Overall, the trajectory remains negative, and we anticipate levels of 19,100 in the near future, he added.

The Bank Nifty has also experienced a decline. It is unlikely, however, to result in a larger trend reversal. The pullback is likely to end in the 45,100–45,200 range, where the 40-hour moving average and the hourly upper Bollinger band provide resistance. The hourly momentum indicator has recorded a retracement to the equilibrium line, indicating that the retracement has reached completion and can now initiate a new cycle. Overall, the trajectory is still negative, and we anticipate a short-term decline to 44,000.

Disclaimer: The opinions and investment advice expressed by Moneypoise.com’s experts are their own and do not reflect the views of the website or its management. Before making investment decisions, Moneypoise.com recommends that users consult with certified experts.

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If the index maintains its position above the current level, it may encounter an initial barrier between 19,600 and 19,700, while 19,300 is expected to be a solid support level on the downside, according to experts.

The Nifty50 opened higher at 19,463 and remained within a 100-point range throughout the session before concluding the week at 19,515, up 135 points. On the daily charts, the index nearly recovered all of its previous day’s losses and formed a bullish candlestick pattern with minor upper and lower wicks and a higher high, higher low formation.

On a weekly scale, however, a bearish candlestick pattern with upper and extended lower shadows has formed, resulting in lower highs and lower lows for the second consecutive week as the index declined 0.66 percent. Until it returns to higher highs and higher lows with less volatility, this is a cause for concern.

“From a technical standpoint, Friday’s pattern indicates a market upswing. The Nifty has been forming a bearish pattern consisting of lower tops and bottoms over the course of the last 6-7 trading sessions, and the current uptrend may be consistent with the formation of a new lower top in the sequence. “However, the lower top reversal must be confirmed,” said HDFC Securities’s Nagaraj Shetti, a technical research analyst.

He believes the development of a high-wave pattern at the market’s highs indicates the market is in a corrective phase with volatility.

“Therefore, the near-term trend of the Nifty remains negative. In the upcoming sessions, the current uptrend may encounter a formidable obstacle between 19,600 and 19,650. The immediate support level is 19,400,” said Nagaraj.

On the Option front, the highest Call open interest was observed at the 19,600 strike, followed by the 20,000 strike, with significant Call writing at the 19,600 strike and then at the 19,900 strike, whereas the highest Put open interest was observed at the 19,400 strike, followed by the 19,500 strike, with a writing at the 19,500 strike and then at the 19,400 strike.

The above data indicated the Nifty may see immediate resistance at 19,600 levels, with support at the 19,400 mark.

Bank Nifty

Bank Nifty has also experienced a recovery, but experts say that until it decisively closes above the 45,800 barrier, it is likely to stay rangebound.

On the daily scale, the Bank Nifty fluctuated by about 600 points before closing 366 points higher at 44,880, forming a small bodied bullish candlestick pattern with minor upper and lower shadows; on the weekly scale, it declined by about 1.3 percent, forming yet another bearish candlestick pattern with lower highs and lower lows.

The 50-day simple moving average (SMA) or 44,500 would be the rock-solid support level for traders. Abol Athawale, vice president – technical research at Kotak Securities, predicted that the index would rise over that level and reach 45,400–45,500.

On the flip hand, he thinks the uptrend is at risk below 44,500 and could retest the 44,300-44,000 barrier below there.

Investment experts’ opinions and advice on Moneypoise.com are their own and do not reflect the views or opinions of the website or its administration. Users of Moneypoise.com are cautioned to consult with qualified professionals before making any financial moves.

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Both the BSE Sensex (up 1.19 percent, or 780.45 points, to 66,060.90) and the Nifty50 (up 1.20 percent, or 232.7 points, to 19,564.50) ended the day with gains. The benchmark indices both reached new all-time highs this week, closing at 66,159.79 and 19,595.35, respectively. Increases of 1%, 1.3%, and 1.7% were seen in the BSE Large-cap, Mid-cap, and Small-cap indices, respectively.

“The Indian stock markets enjoyed a spectacular week, with the benchmark index Nifty50 continuing its ascent for a third week in a row. The bulls’ ambition to lift the market was on display in the widespread participation that coincided with the start of earnings season. According to Angel One’s Senior Analyst for Technical and Derivative Research, Nifty50 index maintained its positive status and registered new highs to finish the week in uncharted territory, acquiring 1.20 percent of weekly gains.

The price behaviour of the benchmark index reflected the upward gains among global peers and the sectoral rotation that occurred throughout the week. Technically speaking, the bulls are showing remarkable resilience by not relinquishing their hold despite being overbought in several key indicators of their strength. However, after such a sharp upswing, it’s important to not become too comfortable and write off the prospect of a rest.

He believes that the 19,400-19,300 range could act as a temporary floor, while the 19,200 range represents rock-solid support in the same time frame. On the other hand, there is no longer a relevant barrier to overcome because the index has moved into uncharted territory. The immediate target for the next service area could be somewhere between 19,650 and 19,700.

The BSE IT index gained 5%, the Metal index gained 3.25%, the Realty index gained 1.7%, and the Power index declined 2%.

The early local market weakness was caused by negative indications from the US markets and expectations of bad results in the IT sector. Investors became wary as food inflation rose in response to rising mandi prices that were going over the Minimum Support Prices (MSP) and to the relatively low level of Kharif sowing.

Future inflation will be heavily influenced by the monsoon’s development and the trajectory of Kharif sowing in July. Vinod Nair, head of research at Geojit Financial Services, said that investors are more optimistic now that US inflation is under control since they expect a rate hike of 25 basis points to be enough to support the US economy.

As a result of this optimistic outlook, Indian IT stocks have seen heavy buying despite weak Q1 earnings. As a result, the value of the US dollar and bond yields have declined. The Indian stock market as a whole moved up to record highs on the back of optimistic forecasts for Q1 earnings, steady FII inflows, falling wholesale prices, and moderate volatility (VIX). Nifty Bank’s performance lagged behind the rest of the index since the sector got off to a poor start during earnings season. However, he added, “investors are keenly anticipating additional earnings reports in the coming week to assess their trading direction.

Companies such as Zen Technologies, Lloyds Steels Industries, Pix Transmissions, Patel Engineering Company, Moschip Technologies, Mazagon Dock Shipbuilders, Precision Camshafts, HPL Electric & Power, Lloyds Metals and Energy, Xchanging Solutions, NELCO, Tejas Networks, and Allied Digital Services all saw gains of between 20 and 37 percent, contributing to a 1.7 percent increase in the BSE Small-cap index.

Delta Corp, Swan Energy, V2 Retail, RattanIndia Power, Heubach Colourants India, Mangalam Industrial Finance, Mangalore Chemicals and Fertilisers, Gulshan Polyols, Wardwizard Innovations and Mobility, and AMI Organics all had negative returns.

The value of equity transactions between FIIs and DIIs this week was Rs 5,417.78 crore for FIIs and Rs 1251.29 crore for DIIs.

So far this month, FIIs have sold shares totaling Rs 14,582.63 crore, while DIIs have sold shares worth Rs 8,129.50 crore.

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Where is Nifty50 headed?

Amol Athawale, Vice President – Technical Research, Kotak Securities

The Sensex jumped above the 66,000 level as IT stocks surged as earnings from some leading technology companies came in higher than expected. With US inflation cooling, investors are hopeful the Federal Reserve will hold off on raising interest rates later this month as the market is being swamped by high FII inflows. The creation of a bullish candle on the daily and weekly charts, as well as a breakout on the intraday charts, lends credence to an ongoing rise in the Nifty from its current levels.

Trend-following traders should use the level of 19,450 as a decision point, with 19,800 as a possible extension. If the market falls below $19,450, we could see a sharp decline to between $19,400 and $19,300.

The 20-day Simple Moving Average (SMA), or 44,500 for Bank Nifty, would be a key trend-determining level. If the index rises over that mark, it may try to re-enter the 45,250–45,600 range again. Below 44,500, however, the Bank Nifty may fall to the 50-day simple moving average (SMA), now around 44,000.

Ashwin Ramani, Derivatives & Technical Analyst, SAMCO Securities

After breaking above 19,500, the Nifty is set to continue its upward path. After a solid Friday’s trading, the Nifty’s support moved higher, to 19,400 from 19,300.

The 44,554-point 20-day exponential moving average (DEMA) served as a floor for Bank Nifty. Bank Nifty’s next support is around 43,500, so if it closes below that level, we could see more selling pressure. Bank Nifty buying enthusiasm can be stoked with a convincing close above 45,000.

Disclaimer: The views and investment tips expressed by experts on Moneypoise.com are their own and not those of the website or its management. Moneypoise.com advises users to check with certified experts before taking any investment decisions.

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