Stock Market On September 2, And Ahead: What Will Drive Sensex, Nifty This Week? Key Factors Here!

Indian stock market is likely to have a firm start to September as Gift Nifty hints at a positive opening for Sensex and Nifty on Monday, September 1, 2024. On the global front, Asian shares were in green as investors braced key economic data this week including the US jobs report that is expected to give further clarity on the Fed's rate cut later in the current month. Last week, Wall Street also concluded in gains.

Last week, on Friday, despite recent weakness in the broader market, which was mostly driven by a small number of heavyweights, Sensex and Nifty ended higher. While the Sensex added 257.11 points, or 0.31%, to end at 82,391.72, the Nifty ended 94.85 points, or 0.38%, higher at 25,246.80.

Overall, in August 2024, Sensex and Nifty saw nearly 1% gains each.

What To Expect Ahead?

Vinod Nair, Head of Research, at Geojit Financial Services, said, "Despite a lack of fresh triggers in the domestic economy, the market has showcased a broad-based recovery and breached a new high, driven by domestic inflows and renewed sentiment on the FED rate cut in the September meeting. Consolidation in the US 10-year yield along with outperformance in the IT index by 4% this week pointed to the possibility of higher spending, which is likely to increase the prospects of an upgrade in earnings.

Nair added that a positive shift in FII's stance towards the domestic market will keep the overall sentiment positive. Progressing monsoon season and increasing the capacity of reservoir level brighten the prospects of the rural economy and will increase discretionary spending.

On the global front, he said, an upbeat US GDP growth and an expectation of a steady US job market may push back the possibility of a deeper rate cut cycle by the FED. The Indian Q1 GDP growth is expected to be moderate, while investors are likely to remain watchful due to premium valuation and may keep their eye on defensive and value stocks.

According to Shrey Jain Founder and CEO of SAS Online - India's Deep Discount Broker, a notable characteristic of the current market trend is its remarkable stability. Over the past 11 trading sessions, the market has shown a steady ascent, accompanied by a decline in the volatility index VIX, which now stands at 13.79.

Jain added this trend is expected to persist in the near term. A potential breakout could occur if banking stocks experience substantial buying. It is advisable to avoid aggressive shorting of Nifty and instead consider buying on dips, as disciplined traders with strict stop-loss strategies are likely to be rewarded.

Giving a technical outlook, Amol Athawale, VP-Technical Research, Kotak Securities said, we are of the view that, For the trend following traders now 25000/ 80800 would act as a sacrosanct support zone. As long as the market is trading above the same, the bullish texture is likely to continue. On the Higher side, 25350-25500 / 82800-83300 would be the crucial resistance areas for the bulls. However, below 25000/80800 uptrend would be vulnerable. Below the same traders may prefer to exit out from the trading long positions. For Bank Nifty now, 50-day SMA (Simple Moving Average) or 51550 would be the immediate resistance zone. Post 51500 breakout it could rally up to 52000-52500. On the other side, 51000 or 10-day SMA would be the key support zone. Below the same, the sentiment could change. Below it could slip till 20-day SMA or 50625 -50500.

Indian Stock Market Weekly Outlook:

For this week, Vikram Kasat, Head - Advisory, PL Capital - Prabhudas Lilladher. said, that market movement may hinge on key economic indicators, such as inflation reports and employment data, which could either sustain the current rally or prompt a pullback. Volatility may also increase as investors react to corporate earnings and any unexpected global news.

Moreover, Palka Arora Chopra, Director of Master Capital Services said, the outlook for the market will be guided by the major domestic and global economic data such as HSBC India Services PMI (Aug), HSBC India Manufacturing PMI (Aug) ISM Manufacturing PMI (Aug), JOLTs Job Openings (July), Initial Jobless Claims, S&P Global Services PMI (Aug) and Nonfarm Payrolls (Aug).

Highlighting further, Arora added the Indian equity indices, Nifty50 and Sensex, have sustained their upward trajectory for the third consecutive week, reaching new all-time highs, driven by robust inflows from foreign institutional investors (FIIs). The market rally was further supported by improving global sentiment, bolstered by better-than-expected U.S. economic data and growing anticipation of a U.S. interest rate cut in the upcoming September meeting. The Nifty50 surged by 1.66%, closing at 25,235.90, while the Sensex climbed 1.58%, ending the week at 82,365.77. The U.S. core PCE price index, the Federal Reserve's preferred measure for underlying inflation, increased by 0.2% in July, in line with expectations, reinforcing the belief that the Fed may be poised to begin cutting rates. On the domestic front, FIIs emerged as net buyers, injecting ₹9,217.29 crore into the cash segment this week. Domestic Institutional Investors (DIIs) also continued their buying spree, adding ₹1,197.42 crore to their holdings in the cash segment.