Nifty, Sensex edge slightly higher as investors eye Jackson Hole; Auto stocks surge

After a 6-day breather, the India VIX also ended higher by over 4 percent to settle at nearly 14 levels.

Benchmark indices Nifty and Sensex ended the week on a muted note, closing just higher as investors await US Fed Chair Jerome Powell's commentary at the Jackson Hole Symposium scheduled for later today. The development gains significance as a dovish stance from the Fed could likely mean an interest rate cut in its September meeting, the first time since the onset of the Covid-19 pandemic.

At the close, the Sensex was up 95.23 points or 0.12 percent at 81,148.42, and the Nifty was up 22.30 points or 0.09 percent at 24,833.80. About 1,798 shares advanced, 1,601 shares declined, and 81 shares unchanged.

A mixed trend was seen across the market as the mid-small cap indexes also showed a weak performance. While the midcap index fell 0.6 percent, the smallcap index ended 0.15 higher, outperforming the headline indices. To be sure, the broader market has outpaced Nifty's year-to-date growth of over 14 percent comfortably after rallying almost 27 percent each.

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It was a rather choppy session on the bourses as indicated by the VIX. After a 6-day breather, the India VIX also ended higher by 4 percent to settle at nearly 14 levels.

"All eyes will be on tomorrow’s US Fed Chair Powell's speech at the Jackson Hole Symposium. Investors would look for hints on interest rate cuts. Hopes are running high for a rate cut in the September meeting followed by more rate cuts in subsequent meets. The market thus is likely to consolidate in the near term, while sectoral rotation and stock-specific action will be at play," Siddhartha Khemka, Head of Retail Research at Motilal Oswal, said.

Among stocks, two-wheeler major Bajaj Auto rallied almost 5 percent to top the Nifty. This comes just a day after CNBC TV-18 reported the company received approval for all the 13 vehicles it had sought production-linked incentives (PLI). The company has received PLI approval for two- and three-wheelers. The company is the only one to have received the nod for all products it had sought PLI incentives for, the report added.

"On Monday, markets will likely react to global cues following the US Fed speech. We recommend maintaining a positive outlook unless the Nifty decisively breaks below 24,500. We continue to believe that the banking sector holds the key to the next directional move, as other sectors are engaged in a balancing act. In the meantime, traders should avoid taking aggressive positions and stay stock-specific," Ajit Mishra, Senior Vice President at Religare Broking, said.

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Among sectors, the Nifty Auto index was the brightest spark, rallying over 1 percent. Not just Bajaj Auto -- Hero MotoCorp, TVS Motors, and Tata Motors also significantly contributed to the upbeat mood in the sector. Nifty Energy followed next after stocks such as Coal India, Power Grid, and Adani Green carried the index higher.

The Realty index tanked the most in today's trade, falling over 2 percent after DLF, Macrotech Developers, Godrej Properties, and Oberoi Realty dragged the index lower. Market analysts at Citi suggest that the index is overvalued after the index has rallied over 90 percent in the past year. Nifty IT also weighed on market sentiment after falling 1 percent due to its sensitivity to interest rate fluctuations.

In the end, top gainers on the Nifty were Bajaj Auto, Coal India, Tata Motors, Sun Pharma and Bharti Airtel, while losers included Wipro, ONGC, Divis Labs, Asian Paints and Nestle India

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