Broader indices hit fresh highs; More than 80 smallcaps rise up to 34%

Among sectors, BSE Pharma and Nifty PSU Bank indices down 1.5 percent each.

Indian equity markets ended flat and extended profit booking in the fifth consecutive week ended August 25 amid volatility due to mixed global cues, rising US bond, poor monsoon, RBI meeting minutes' concern over rising inflation and cautious mood ahead of Federal Reserve Chair Jerome Powell's speech at the Jackson Hole.

This week, BSE Sensex was down 0.09 percent or 62.15 points to close at 64,886.51, and Nifty50 fell 0.22 percent or 44.35 points to finish at 19,265.80.

However, broader indices, BSE Mid-cap and BSE Small-cap outperformed and touched fresh highs in this week and added 1.5 percent and 2 percent respectively. The BSE Large-cap Index ended on flat note.

"On the weekly chart, Nifty50 has formed an Inverted Hammer candlestick pattern which indicates a potential reversal of the trend, and on Friday, the Index managed to close above the strong support level of 19,250. The same candlestick pattern was spotted in the weekly chart of BankNifty as well. The immediate support for Nifty is at 19,200 while the higher side is capped at 19,470, and in the case of BankNifty, the support is 43,600 while resistance stood at 44,960. Any uptick in the Nifty and BankNifty will be accompanied by the hidden bullish divergence in the RSI which is an extremely bullish sign," said Aditya Gaggar Director of Progressive Shares.

"Except for the pharma sector, all the other sectors are stuck in the range and only breakout on either side will give a proper direction. The ongoing correction in the Pharma sector is likely to continue to the tune of 1-2 percent before the resumption of an uptrend."

"Despite the correction in the markets, Mid and Smallcap indices ended the week in green, and a couple of stocks have given a strong breakout while some are on the verge of giving a breakout which indicates a continuation of outperformance by the Broader markets going forward as well," he added.

Among sectors, BSE Pharma and Nifty PSU Bank indices were down 1.5 percent each, Nifty Energy Index was down 1.2 percent, while Nifty Information Technology index added 1 percent and the Nifty Media index rose 0.6 percent.

The BSE Small-cap index rose 2 percent with Prakash Industries, Kopran, Titagarh Rail Systems, Jupiter Wagons, International Conveyors, Garware Hi-Tech Films, Gujarat Mineral Development Corporation, Gabriel India, Atul Auto, Centum Electronics and Jain Irrigation Systems added over 20 percent.

On the other hand, Sadhana Nitrochem, DCM Shriram Industries, Shoppers Stop, Kirloskar Oil Engines, MSP Steel & Power, Tanla Platforms, Windlas Biotech, Tega Industries and Cerebra Integrated Technologies fell 9-16 percent.

"There is already a great degree of pessimism with regards to slowing global growth due to rising inflation and higher interest rate scenario, and investors taking no chance further resorted to profit taking ahead of the outcome of the Federal Reserve Chairman Jereme Powell’s speech at Jackson Hole symposium. There are fears that the Fed chairman in his speech could highlight worries of rising inflation, and why further rate hike is necessary to bring down the inflation levels," said Amol Athawale, Vice President - Technical Research, Kotak Securities.

"Technically, the Nifty witnessed profit booking near the 20-day SMA (Simple Moving Average). After a long time, the index has closed below the 50-day SMA which is largely negative. For the positional traders, 19,350 could be the trend decider level, above which the market could bounce back till 19,450 and 19,575 levels. On the other hand, selling pressure is likely to accelerate if the index trade below 19,230 and below the same, the market could slip till 19,150-19,100."

"For Bank Nifty, on the lower side 44,000 would be the key support zone while 44,750 or 50 and 20 day SMA and 45,000 could act as immediate hurdle areas for the bulls. Below 44,000, it could retest the level of 43,750-43,500," he added.

The selling from Foreign institutional investors (FIIs) continued in fifth straight week as they offloaded equities worth Rs 4,895.29 crore, while domestic institutional investors (DIIs) bought equities worth Rs 8,495.99 crore in this week. However, in this month so far, FII sold equities worth Rs 15,821.13 crore and DII bought equities worth Rs 17,741.85 crore.

The Nifty index has declined to a significant moving average (55EMA) support level. The sentiment is expected to stay bearish as long as the index remains below 19,450, where the 21-day Exponential Moving Average (EMA) is positioned on the daily timeframe. If the index decisively falls below 19240, it could potentially lead the Nifty towards the 19000 mark.

The Nifty has reached the 38.2 percent Fibonacci retracement level 19,245 of the rise from 16,828 – 19,992 which makes it a crucial level to watch out for. On the weekly charts, Nifty has closed negative for the fifth consecutive week which also indicates there is a lack of buying interest. Weekly, daily, and hourly momentum indicators have a negative crossover which is a sell signal. Thus, both price and momentum indicators suggest a continuation of the fall.

Overall, we shall continue to maintain our negative outlook on the index for a target of 19,100. Crucial support is placed at 19,200 – 19,180 while immediate hurdle is placed at 19,360 – 19,400.

The pullback rally in Bank Nifty has fizzled out at the 44,900 – 45,000 zone where resistance in the form of the 50 percent Fibonacci retracement level was placed. The daily and the hourly momentum indicators provide divergent signals and hence a consolidation is likely. The range of consolidation is likely to be 44,800 – 43,900.