Markets Outlook This Week; RIL AGM, Global Trends, Macro Data To Dictate Sensex, Nifty

Indian stocks recorded a fifth consecutive weekly drop as sentiments were influenced by a host of factors with the Jackson Hole meeting outcome taking the main focus. Sensex ended the trading week between August 21st to 25 with a marginal downside, while Nifty 50 shed half a per cent. On Friday, the benchmarks ended lower than their critical marks of 65,000 and 19,300 due to a broad-based selloff across sectoral indices. In the trading week from August 28th to September 1st, the domestic equities will be driven by Reliance Industries annual general meeting (AGM), global trends and major macro data.

Sensex ended at 64,886.51, down by 365.83 points or 0.56%, while Nifty 50 dipped by 120.90 points or 0.62% to end at 19,265.80 on Friday.

In the trading week from August 21 to 25th, Sensex shed 156.51 points or 0.24%, while Nifty 50 ended lower by 97.45 points or 0.50%.

Talking about the weekly performance, Vinod Nair, Head of Research at Geojit Financial Services said, "The domestic market experienced another week of losses as investor sentiment was influenced by the forthcoming Jackson Hole meeting outcome. Investors are eagerly awaiting insights from Fed officials to gauge the prospects of rate hikes. Despite a slight softening due to a weak US PMI, US bond yields remained elevated. The US Manufacturing PMI, registering at 47 against an expected 49.3, sparked hopes for an extended rate hike pause. Sectors closely tied to the Western economy, like IT and pharma, experienced increased volatility, while domestically-focused mid-and small-cap stocks demonstrated resilience and gained momentum. The recent RBI MPC meeting minutes reiterated a commitment to managing inflation within the target range amidst elevated domestic inflation. Nevertheless, the expectation of an imminent rate hike remains muted due to the perceived transitory nature of current high inflation levels."

Also, Santosh Meena, Head of Research, Swastika Investmart said, "The past week marked the fifth consecutive week of losses on Dalal Street, but broader market indices managed to hold their ground despite prevailing challenges. The market was influenced by a combination of factors including escalating US bond yields, concerns stemming from China, and the downward pressure exerted by heavyweight players like Reliance and HDFC Bank."

The upcoming week's focal point is the eagerly awaited Reliance Annual General Meeting (AGM) on Monday, August 28.

Here's what to expect from the stock market this week.

Arvinder Singh Nanda, Senior Vice President, of Master Capital Services:

Global and domestic macroeconomic data, the trend in the global stock market, crude oil prices, global cues, the movement of the rupee against the dollar, and Investment by FIIs and DIIs will be in focus. Some macroeconomic key events that will drive the market in the coming week are API Weekly crude oil, US GDP data, US Unemployment rate, US manufacturing PMI, Initial Jobless claims, India's Q1 GDP, RIL AGM, S&P India global manufacturing index and forex reserves data.

Nifty prices fell for the fifth consecutive week, resulting in a reduction of approximately 4% from their peak value. Prices are currently trading near a 10-week EMA, which had been acting as a crucial support for a long. A decisive breach below the 19200 mark would signal a continuation of this downward trend, potentially driving prices towards the range of 19000-18900, aligning closely with the vicinity of the 21-week EMA.

Bank nifty prices are forming a higher bottom formation on the weekly chart, and taking support near 21-week EMA. Initial sentiment will remain sideways higher as long as prices are trading above the 43600-43300 support area.

Santosh Meena, Head of Research, Swastika Investmart:

Reliance AGM, global cues, and macro numbers will guide the market this week.

Shifting to the macroeconomic landscape, India is set to reveal its Q2 GDP figures on Thursday, August 31, shedding light on the nation's economic performance. Concurrently, manufacturing Purchasing Managers' Index (PMI) data will be disclosed on Friday, September 1. Meanwhile, Tuesday, August 29, will witness the release of US JOLT job openings data for July, offering insights into the American labor market. Subsequently, Friday, September 1, will feature the disclosure of the US unemployment rate and nonfarm payroll statistics. These global indicators, in conjunction with cues from China, foreign investor activities, and fluctuations in the dollar index and US bond yields, will play a pivotal role in shaping market dynamics throughout the week.

From a technical standpoint, the Nifty index has slipped beneath its 20-day and 50-day moving averages (DMAs), signalling a short-term bearish bias. Key support levels to monitor are 19191 and 18888. On the upside, the 19400-19500 range emerges as a critical resistance zone, the breach of which could pave the way for positive momentum.

As for the Banknifty index, it's currently endeavouring to uphold its 100-DMA around the 43900 mark. However, a notable surge in strength would necessitate conquering the supply zone of 44800-45000. A dip below the 100-DMA could potentially lead to a retest of the 200-DMA in the vicinity of 43000.

In the realm of derivatives, Foreign Institutional Investors (FIIs) have positioned themselves with a 40% long exposure in index futures. The put-call ratio of 0.83 points towards an oversold scenario.

Ajit Mishra, SVP - Technical Research, Religare Broking:

We believe it is a healthy correction so far citing the pace of decline and continued outperformance of the broader indices. However, we suggest not to preempt the reversal and stay with the trend. Apart from the domestic factors, the performance of the global markets will continue to provide cues. Among the major indices, we are seeing a possibility of a rebound in the US markets but it would be critical to hold the 33,700-34,200 zone in the Dow Jones Industrial Average (DJIA) for any meaningful recovery.

Nifty has finally slipped below the short term moving average i.e. 50 EMA, which may prompt a further decline to the major support zone of 18,900-19,100. In case of any attempt to rebound, the 19,500-19,650 zone would continue to act as a hurdle. Among the key indices, we expect banking, financials and IT to show further resilience while pharma and energy may continue to attract selling. Amid all, participants should continue a stock-specific trading approach and maintain positions on both sides.

Disclaimer:

The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, znor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.