Weekly Market Outlook

Key gauges ended the passing week in red terrain as traders remained cautious ahead of Federal Chairman Reserve Jerome Powell’s speech for clues on the interest rate outlook.

Markets made an optimistic start as traders cheered reports that Moody’s Investors Service affirmed India’s sovereign rating at ‘Baa3’ with a stable outlook and said high growth will support a gradual increase in income levels, which will further contribute to economic strength.

Sentiments also remained upbeat with the latest data by the Reserve Bank of India showing that India’s foreign exchange reserves snapped a three-week losing streak and increased by $708 million to $602 billion in the week ended August 11.

Markets extended gains taking support from ICRA Ratings’ report that India’s economic growth will accelerate to 8.5 per cent in the April-June period of the current fiscal from the 6.1 per cent growth rate witnessed in the preceding January-March quarter.

Traders also took some support with the soft landing of Chandrayaan-3. Successful soft landing on the lunar surface, making the country the first one to land on the south polar region (dark side) of the Moon.

However, markets took a U-turn from thereon and sharp selling on the final two days of the week dragged markets lower for the fifth straight week as investors turned cautious ahead of the central bankers’ comments at the Jackson Hole meeting, including that by US Federal Reserve chair Jerome Powell.

The MPC report added that the headline inflation is likely to witness a spike in the near months on account of supply disruptions due to adverse weather conditions. It said there are risks from the impact of the skewed southwest monsoon so far, a possible El Nino event and upward pressures on global food prices due to geopolitical hostilities.

BSE movement for the week

The Bombay Stock Exchange (BSE) Sensex decreased 62.15 points or 0.10% to 64,886.51 during the week ended August 25, 2023.

The BSE Midcap index gained 452.59 points or 1.50% to 30,717.91 and Small cap index surged 772.64 points or 2.19% to 36,055.96.

On the sectoral front, S&P BSE Capital Goods was up by 818.81 points or 1.90% to 43,991.70, S&P BSE Power was up by 65.09 points or 1.53% to 4,321.98, S&P BSE TECK was up by 188.17 points or 1.36% to 13,998.10 were the top gainers.

S&P BSE Healthcare was down by 159.06 points or 0.57% to 27642.28, S&P BSE Oil & Gas was down by 107.92 points or 0.57% to 18707.17 and S&P BSE Auto was down by 212.36 points or 0.61% to 34887.21 were the few losers on the BSE.

NSE movement for the week

The Nifty decreased 44.35 points or 0.23% to 19,265.80.

On the National Stock Exchange (NSE), Bank Nifty was up by 380.40 points or 0.87% to 44,231.45, Nifty IT was up by 310.50 points or 1.01% to 30,914.55.

Nifty Mid Cap 100 gained 655.85 points or 1.73% to 38,471.25 and Nifty Next 50 gained 406.55 points or 0.93% to 44,087.55.

FII transactions during the week

Foreign Institutional Investors (FIIs) were net buyers in the equity segment in the week, with gross purchases of Rs 52,237.72 crore and gross sales of Rs 49,941.42 crore, leading to a net inflow of Rs 2,296.30 crore.

They also stood as net buyers in the debt segment with gross purchases of Rs 6,673.27 crore against gross sales of Rs 5,370.02 crore, resulting in a net inflow of Rs 1,303.25 crore.

In the hybrid segment, FIIs stood as net buyers, with gross purchases of Rs 93.75 crore and gross sales of Rs 84.03 crore, leading to a net inflow of Rs 9.72 crore.

Outlook for the coming week

Markets showed a negative trend in the passing week due to persistent concerns over the health of China’s economy and U.S. interest rates.

The coming week will mark the start of the new month and traders will be eyeing lots of macro-economic data along with the monthly sales numbers from the auto companies that will keep the markets buzzing.

On the economic front, investors will be eyeing the data on Government Budget Value, scheduled to be released on August 31. India’s fiscal deficit increased to Rs 4.51 trillion in April-June 2023-24, compared to Rs 3.52 trillion in the same month of the previous fiscal year.

On the same day, traders will be eyeing the core sector growth and Gross Domestic Product (GDP) data. Besides, S&P Global Manufacturing PMI and Foreign Exchange Reserves data are scheduled to be released on September 01.

On the global front, investors would be eyeing a few economic data from the world’s largest economy, the United States (US), starting with the Dallas Fed Manufacturing Index on August 28 followed by Redbook, Dallas Fed Services Index, House Price Index on August 29, Goods Trade Balance, Pending Home Sales on August 30, Core PCE Price Index, Personal Income, Personal Spending, Initial Jobless Claims, Chicago PMI on August 31.

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