Trade Setup On Tuesday: Sensex, Nifty Outlook As Q1 Earnings Season Overs; What Will Drive Market?

Indian stock market is likely to be influenced by global trends as the Q1 earnings season is over. Global stocks trended higher overnight as the dollar slid down with MSCI's broadest index of world stocks climbing by 1%. In India, the larger prospect of the market is positive however fresh rallies are expected only after the dismissal of 24,650 and 80,725 in Nifty and Sensex. The key major event is the Jackson Hole Economic Policy Symposium.

In the previous session, the Indian market witnessed a lacklustre performance with Sensex ending at 80,424.68 down by 12.16 points or 0.02% and Nifty closing at 24,572.65 up by 31.50 points or 0.13%. Bank Nifty dipped by 149 points to end at 50,368.35. Smallcaps, consumer durables, metals and oil and gas stocks were top bulls.

On the market performance, Vinod Nair, Head of Research, Geojit Financial Service said, "The Indian market failed to catch up with the initial gains as there is a degree of profit booking witnessed in auto stocks due to a slowdown in demand. However, oil stocks gained momentum with the reduction in windfall tax on crude oil. The recent healthy US economic data diminished the likelihood of a US recession, while a slide in the dollar index supported the hypothesis of a rate cut in the September FOMC meeting.

Meanwhile, on August 19, FPIs were net sellers with an outflow of Rs 2,667.46 crore in Indian equities, however, the majority of losses were offset by huge buying from DIIs who infused Rs 1,802.92 crore in the stocks.

On August 20, Shiju Koothupalakkal - Technical Analyst at Prabhudas Lilladher expects the Nifty 50 to find support and resistance around 24,400 and 24,750. While Bank Nifty is seen to have support and resistance around 49,900 and 50,800.

The Prabhudas analyst also recommends buying in three stocks on Tuesday. These are:

- BUY WEST COAST PAPER cmp 602.95 Stop Loss 588 Target 630

- BUY MIDHANI cmp 434.50 Stop Loss 424 Target 454

- BUY GMDC LTD cmp 366.20 Stop Loss 357 Target 385

Vikram Kasat, Head - Advisory, PL Capital - Prabhudas Lilladher said, that with Q1 earnings season over, the focus now turns to Federal Reserve chief Jerome Powell's speech at the Jackson Hole Economic Policy Symposium.

Along similar lines, Prashanth Tapse, Senior VP (Research), Mehta Equities said, investors will be keenly watching the Jackson Hole Economic Symposium on Friday, as there are hopes that the Fed could set the stage for the first rate cut after last week's data on inflation which eased to 3%.

Lastly, Shrikant Chouhan, Head of Equity Research, Kotak Securities said, "We are of the view that the larger market texture is still into the positive side but fresh uptrend rally possible only after dismissal of 24650/80725 Above which market could move up till 24725-24775/81000-81200. On the flip side below 24520/80330, the intraday selling pressure is likely to accelerate. Below the same, it could retest the level of 24450-24400/80000-79800."