Indian equity market Indices had a splendid run in the week gone by. Key benchmark indices rallied around 2 per cent each and settled above the psychological 59,700 (Sensex) and 17,800 (Nifty) levels supported by strength across global markets as crude oil prices eased. The market also took support from the State Bank of India’s report which states that India is likely to become the third largest economy by 2029. India is currently ranked the fifth largest economy.
The market is expected to extend the current uptrend this week but volatility can’t be ruled out amid global macro environment, with focus on monthly inflation numbers in India and the US, and oil prices, experts said.
“The direction of the market in the week ahead will be determined by cues from the global markets as well as important macroeconomic data points,” Vinod Nair, head of research at Geojit Financial Services, said.
Amol Athawale, Deputy Vice President – Technical Research, Kotak Securities Ltd said, “We need to focus more on midcap and small-cap stocks. In the coming week, we are expecting profit taking in financial stocks and outperformance in technology stocks.”
India will announce its CPI inflation data for August and IIP data for July on September 12, while WPI inflation data will be presented on September 14.
Another important data point that global markets will keep an eye on would be US inflation numbers on Tuesday, especially ahead of the Federal Reserve policy meeting on September 20-21.
The data point will decide how the Federal Reserve will act on further rate hikes. As per a recent speech by Fed Chair Jerome Powell, which was largely hawkish, there could be another 75 basis point hike in interest rates in the upcoming policy meeting and the Federal Reserve is expected to continue policy tightening to bring inflation around its two percent target, experts said.
Oil prices falling below $90 a barrel during the last week due to fears of weakening demand amid policy tightening and Covid curbs in China caused a rally in equity markets. But later on Brent crude futures settled the week at $92.42 a barrel as supply threats supported prices.
If the prices stabilise below $100 a barrel and correct further in the coming weeks, that could support equity markets, experts said. Generally, any fall in oil prices is always beneficial for oil importing countries like India.
Continued buying by FIIs for another month also lifted market sentiment. And if the flow continues then the rally may continue in benchmark indices and broader markets, experts said.
FIIs net bought little more than Rs 6,100 crore worth of shares during the passing week. In September so far, they have net bought Rs 3,837 crore worth of shares on top of Rs 22,000 crore of buying in the previous month.
However, domestic institutional investors (DIIs) have utilised the opportunity to take money off the table by selling Rs 352 crore worth of shares.
Nifty Technical Outlook
The Nifty50 has formed a bullish candlestick pattern on weekly charts and formed a small-bodied bullish candle on the daily scale. The index has seen a breakout of its small downward sloping resistance trend line adjoining August 19 and September 6. Hence, if there is further buying then that could take the Nifty50 beyond the psychological 18,000 mark but with choppy trade, experts said.
“The buying in financial & IT counters provided credence to the move and adds conviction to retest the recent psychological level of 18,000 in the week beginning Monday. If global peers support it, we will not be surprised to see it extending towards 18,200 – 18,350 levels,” Sameet Chavan, chief analyst-technical and derivatives at Angel One, said.
He advised traders to continue their recent ‘buy on declines’ strategy and use decline towards the support zone of 17,675 – 17,500 to add fresh longs.
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