In a highly volatile week, the Indian benchmark indices lost 1 percent each and also broke the five-week gaining streak, amid mixed global cues, rising dollar, and crude oil prices. Buying by foreign investors, however, provided some support on the downside.
For the week, the BSE Sensex shed 812.28 points (1.32 percent) to end at 58,833.87, while the Nifty50 fell 199.55 points (1.12 percent) to close at 17558.9 levels. However, in this month till now, the Sensex and Nifty gained over 2 percent each.
On the sectoral front, the Nifty Information Technology index shed 4.5 percent, Nifty Pharma lost 1.7 percent and the Nifty Healthcare index fell 1 percent. On the other hand, the Nifty PSU Bank index added 4.4 percent.
In the last week, the Smallcap index gained nearly 1 percent, Midcap index rose 0.6, while the largecap index fell 1 percent.
"The Nifty had started the week on a negative note following the global cues and corrected with another gap-down on Tuesday. However, the markets recovered some of the losses from the lows and consolidated towards the end to close above 17,550 with a weekly loss of over a percent," said Ruchit Jain, Lead Research, 5paisa.com.
The Nifty has recently rallied sharply without any meaningful correction and it almost reclaimed the 18,000 mark. However, the index now seems to have entered a corrective phase and it ended the first corrective leg around the 20 DEMA at 17,350. The index has then formed a range in last couple of sessions and has ended above the moving average support.
"The Dollar index has seen a resumption of its uptrend which does not well for the emerging markets. Also, the momentum readings on the daily chart have given a negative crossover on the daily chart," Jain said.
"The upside seems to be very limited in the near term and if we break the 20 DEMA, which is now placed at 17,418, then a lot of these long positions which have been rolled from August to September series could see unwinding. Hence, until the markets again break the hurdle of 17800 and 18000, we advise traders to avoid aggressive long trades."
"On the flipside, a close below the above mentioned 20 DEMA support could lead to next leg of down move which could extend towards 17,100. Hence, once this support breaks, traders should look short opportunities from a short term perspective. As mentioned above, factors such as FII positioning, Dollar Index, momentum readings on the daily chart and the moving average supports are likely to drive the near term momentum and hence, traders are advised to keep a close tab on these factors," Jain said.
Foreign institutional investors (FIIs) bought Rs 450.36 crore of equities, while domestic institutional investors (DIIs) sold equities worth of Rs 503.32 crore in the last week.
So far in August, the FIIs bought equities worth Rs 18,420.9 crore, and DIIs sold equities worth Rs 6,555.99 crore.
“The equity markets remained volatile during the week, owing to weak global cues. The inflation numbers and expectations regarding the response of the global central banks to tame it continues to be the major factor influencing volatility," said Dr Joseph Thomas, Head of Research at Emkay Wealth Management.
"The hawkish monetary policy is seen by market participants resulting in a recessionary scenario in developed markets. The market will take immediate cues from the Jackson Hole symposium with regards to gauging the pace of the future rate hikes," he said.
The BSE Small-cap index added nearly 1 percent with 62 stocks rose 10-33 percent, including Medicamen Biotech, Surya Roshni, Seamec, Indostar Capital Finance, Anant Raj, Kingfa Science & Technology, HPL Electric & Power, Reliance Communications, Texmaco Rail and Engineering, Uflex, Lumax Auto Technologies and Shivalik Rasayan.
On the other hand, Tata Teleservices (Maharashtra), PNB Gilts, Hatsun Agro Products, Centrum Capital, Forbes Gokak, Patel Engineering Company, Gujarat Mineral Development Corporation, Sadbhav Engineering and APL Apollo Tubes lost 8-11 percent.
"Bulls and bears continued to battle it out in the domestic market during the week as weak global cues persisted and kept the market under pressure. A spike in European energy prices, an uncertain growth outlook and rate hike fears ahead of the Jackson Hole gathering kept the global market on its toes," aid Vinod Nair, Head of Research at Geojit Financial services.
"Crude prices rose as Saudi Arabia suggested that OPEC+ supply may be reduced to address market instability. Although Indian equities are trading at a premium over other emerging markets, the consistent support from FIIs is guiding the domestic market."
"While the Nifty Bank appears to be the strongest segment, Nifty IT witnessed selling pressure as majors are scaling down variable pay due to margin pressure. The week ahead is packed with important macroeconomic data, which will aid in assessing the strength of the economy," he said.
The BSE 500 index was down 0.65 percent dragged by the Tata Teleservices (Maharashtra), Hatsun Agro Products, Mphasis, Adani Power, Hindustan Petroleum Corporation and APL Apollo Tubes.
Where is Nifty50 headed?
Apurva Sheth, Head of Market Perspectives, Samco Securities
The upcoming trading week is expected to be jam-packed with activities. To begin, India’s GDP growth rate and S&P Global Manufacturing PMI will become key indicators to assess the state of the domestic economy.
From a global standpoint, markets can experience whipsaw movements as investors will be closely watching the US initial jobless claims and unemployment rate.
Nifty50 index closed on a negative note following the formation of a bearish evening star candlestick pattern on a weekly timeframe. The short-term trend is still optimistic, but the market still remains elevated from the means at the same time, so the upside is likely to be limited.
The aforementioned candlestick pattern indicates a minor profit booking fall.
Bank Nifty and major US equity indices, on the other hand, are showing relative strength in the short term. We believe the levels around 17400 on the Nifty are likely to serve as make or break levels. A break below this level may result in a retest of the 17100 level. Until then, traders should have a mildly bullish outlook.
Sameet Chavan, Chief Analyst-Technical and Derivatives, Angel One:
The Nifty has now closed precisely around the mid-point of the immediate trading range of 17750 – 17350 and since markets have lost their sheen, it would be difficult to predict the immediate path of action amid some global nervousness.
In our sense, one should avoid trading aggressively within the range and till the time, we remain above 17350, there is no reason to worry for. Only a breakdown below this sacrosanct support would extend the corrective phase towards the major support zone of 17100 – 17000. Before 17350, we can see immediate support around 17450.
On the flip side, 17700 – 17750 are the levels to watch out for. If bulls have to strengthen their stance, the Nifty needs to surpass the higher boundary with some authority. Till then it’s better to take one step at a time and ideally, the positioning must be on a lighter side.
Since global markets are showing mixed directions and few global events are lined up, it would be important to keep a regular tap on these developments. If there is no aberration in the coming week, we may resume the higher degree uptrend soon.Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.