The benchmark indices as well as broader markets continued its recovery for another week ended August 23, following positive global sentiments, including better-than-expected US economic numbers and increasing expectations for a September rate cut from the US Federal Reserve, and stable oil prices. The slowdown in FII selling and robust DIIs buying also aided the uptrend.
On Monday, the market will first react to the Federal Reserve Chair Jerome Powell's speech in the Jackson Hole Economic Symposium, wherein he clearly signaled the first rate cut in September policy meeting. The US dollar index fell to more than a year low (at 100.68), while the 10-year bond yield dropped to 3.804 percent.
Overall, the week ahead is expected to be positive with intermittent consolidation for the market, with focus on the June quarter GDP numbers from the India and US, Reliance Industries AGM and global peers’ trend, experts said.
The BSE Sensex gained 0.81 percent and the Nifty 50 rallied 1.15 percent, while the Nifty Midcap 100 index was up 1.6 percent and Nifty Smallcap 100 jumped 3.5 percent during the week gone by.
"US Fed Chair Jerome Powell's speech at the Jackson Hole Symposium will provide direction to global equities. Overall, we expect the market to witness a gradual uptick with stock-specific action," Siddhartha Khemka, Head - Retail Research at Motilal Oswal Financial Services said.
Here are 10 key factors to watch:
US GDP
Globally investors will focus on the second estimates for the US GDP growth, core PCE prices and real consumer spending in Q2-CY24. The US economy grew at a pace of 2.8 percent in Q2 (which was much better-than-expectations) as per the advance estimates published in July on healthy consumer demand, increased government spending, and sizeable inventory building, against 1.4 percent in Q1-CY24.
Global Economic Data
In addition, durable goods orders, pending home sales, personal income & spending, and core PCE price index for July, and weekly jobs data from the US will also be watched. The focus will also be on the unemployment for July from the Europe, and unemployment rate, retail sales and construction orders for July from the Japan, next week.
India GDP
On the domestic front, the GDP growth numbers for the June 2024 quarter will be closely watched on August 30. Economists expect economic growth print in the 6-7 percent range for the first quarter of current financial year, against 7.8 percent in March FY24 quarter. According to them, a contraction in government capital expenditure and a dip in urban consumer confidence may impact the growth. The Reserve Bank of India already lowered its growth forecast for Q1FY25 to 7.1 percent, from 7.3 percent earlier.
"Q1 FY2025 saw a temporary lull in activity in some sectors related to the Parliamentary elections and sluggish Government capex, both for the Centre and the states. Further, urban consumer confidence reported a surprising downtick in the May 2024 (and July 2024) rounds of the Central Bank’s Consumer Confidence Survey," Aditi Nayar, Chief Economist, Head-Research & Outreach at ICRA said.
In addition, fiscal deficit and infrastructure output for July, and foreign exchange reserves for week ended August 23 will also be released on August 30.
Apart from the economic growth numbers, the street will also focus on the Forty-Seventh Annual General Meeting (Post-IPO) of the billionaire Mukesh Ambani-owned Reliance Industries scheduled on August 29 at 2:00 pm. The stock gained 1.47 percent during the week, continuing uptrend for another week.
The key things to watch out for may be the updates on the listing timeline for Reliance Jio Infocomm as well as Reliance Retail, if any, and further progress of the New Energy business.
The selling pressure from the foreign institutional investors in the Indian equity cash segment continued for another week but slowed down considerably compared to previous weeks, may be after the increasing signals for a fed funds rate cut in September. Further slow down in selling activity or resuming buying interest at FII desk if any will be keenly watched by the market participants as if that happens, then the equity markets may get further boost in coming weeks, experts said.
FIIs have net sold Rs 1,609 crore worth shares in the week gone by, taking the total monthly outflow to Rs 30,586 crore in August, but domestic institutional investors, who have been providing a solid support to the market on every dip, continued pumping in major funds and in fact, compensating FII outflow on a major scale. DIIs bought Rs 13,020 crore worth shares for the week, and Rs 47,080 crore for the month.
The primary market will see a lot of action in the coming week with nine IPOs hitting Dalal Street and 8 companies making their debut on the bourses. Three initial public offerings will be from the mainboard segment with Premier Energies' Rs 2,830-crore public issue opening on August 27, ECOS India Mobility & Hospitality's Rs 601-crore issue on August 28, and Rekha Rakesh Jhunjhunwala-backed Baazar Style Retail IPO on August 30. Interarch Building Products IPO share will list on the BSE and NSE on August 26, and Orient Technologies shares on August 28.
From the SME segment, Indian Phosphate's IPO will be the first to open for subscription on August 26, followed by the maiden public issues of Jay Bee Laminations, Vdeal System, and Paramatrix Technologies which will be launched on August 27. Aeron Composite's IPO subscription will start on August 28, and Archit Nuwood Industries' issue will open on August 30. Forcas Studio, and Brace Port Logistics will list their shares on the NSE Emerge on August 26, while Ideal Technoplast Industries, and QVC Exports will debut on the NSE Emerge on August 28. Further, the trading in Resourceful Automobile, and Rapid Multimodal Logistics shares will commence on the BSE SME effective August 29, and August 30, respectively.
Technical View
Technically, the Nifty 50 has formed bullish candlestick pattern on the weekly charts with continuation of higher highs-higher lows formation for another week, while the index sustained above 10-week EMA for 15th consecutive week, which is a positive sign. Given the positive sentiment, experts expect the index to march towards psychological 25,000 mark in the coming week as long as it defends 24,800 on closing basis and above 25,000, 25,100-25,200 is the zone to watch out for, while the sacrosanct support lies at 24,500.
F&O Cues, VIX
The monthly options data indicated that the 24,900-25,000 is the likely hurdle on the higher side for the Nifty 50 next week, while the immediate support at 24,500, with 24,000 being the crucial support.
On the Call side, the maximum open interest was observed at the 26,000 strike, followed by the 25,000 and 25,500 strikes, with maximum writing at the 24,800 strike, and then the 24,900 and 25,400 strikes. On the Put side, the 24,000 strike holds the maximum open interest, followed by the 24,500 and 24,800 strikes, with maximum writing at the 24,800 strike, and then the 25,000 and 24,900 strikes.
The volatility maintained downward journey for another week, falling well below the 15-16 levels which is giving comfort for bulls. The trend may remain favourable for bulls as long as the volatility stays below these levels, according to experts. The India VIX, the fear index, dropped 5.9 percent during the week, to 13.55, from 14.4 levels, in addition to 6.08 percent fall in the previous week.
Auto Sales
Over the weekend, especially on Sunday next week, automobile companies will start announcing their August sales numbers. Hence, auto stocks may be in focus on Friday ahead of the sales data. In July, total two-wheeler sales increased by 17.17 percent, and three-wheeler sales by 12.88 percent, while the passenger vehicle segment recorded 10.18 percent growth in sales and commercial vehicle sales grew by 5.93 percent, but tractors segment recorded nearly 12 percent decline compared to same month previous year, according to the FADA Research.
Corporate Action
Here are key corporate actions taking place next week:
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