Market barometer Sensex wound up the week gone by with gains of nearly 3 percent while Nifty logged gains of over 2 percent as sentiment remained upbeat on hopes of a speedy economic recovery and expectations of further fiscal and monetary support.
Financials displayed a dazzling show during the week. Nifty Bank surged 10 percent in the week gone by.
Financials rallied after the Federal Reserve's dovish message on the future path of interest rates which meant that interest rates will stay ultra-low for as long as needed to support the economy.
Even RBI Governor said the central bank has not exhausted its ammunition to deal with the current situation due to the coronavirus pandemic.
The trend of foreign fund inflow shows India remains obe of the favourable markets for FPI. As per data available with NSDL, FPIs have pumped in about Rs 50,688 crore in the Indian financial market in August so far.
Experts are of the view that the near-term trend of Nifty continues to be positive and a sustainable movement for the next week is likely to pull Nifty towards the next upside levels of 12,000 and higher for the coming week.
Let's take a look at the views of analysts as to how markets will move in the coming week:
Vinod Nair, Head of Research at Geojit Financial Services
The economic data coming out indicates a slow recovery in progress for the Indian economy and as such the GDP data, due next week, is expected to be a non-event, barring any surprise deviation.
The market is expected to continue the momentum. Barring, valuation concerns, the positive commentary and earnings upgrades of the results season has boosted the attractiveness of some stocks.
There could be a slight consolidation in the markets when profit booking emerges, but it is not likely to be a long-drawn-out correction.
Deepak Jasani, Head Retail Research, HDFC Securities
Indian markets strengthened during the week gone by as investors cheered optimism about a potential treatment for coronavirus and pick up in business activity.
Above-average rainfall and upbeat global cues on trade talks among the US and Chinese officials following weeks of escalating tensions boosted investor sentiments.
The Nifty closed the week higher by 2.43 percent, up for the second consecutive week. Markets ended higher on all five trading days.
Mid and small-caps are consolidating as expected. Some profit-taking in these is advisable.
Within large-caps, banks have been doing well for the past 5-6 sessions and we could soon see a shift in attention to some other sector.
Nifty continues to do well gaining ground gradually without raising too many eyebrows.
Ajit Mishra, VP - Research, Religare Broking
In the coming week, participants will be closely eyeing the auto sales number and GDP data for cues on how the economy is progressing. Besides, AGR case developments, monsoon progress and news updates related to COVID-19 would also be on their radar.
The banking index has regained strength after months of underperformance and we do not see this fading anytime soon.
It may take a pause after the sharp rise but the bias would remain on the positive side and that in turn would help the benchmark index to hold at the higher levels and even inch higher.
On the other hand, the broader indices have hit a major hurdle on Friday and they’re looking stretched too so we can’t ignore the possibility of profit-taking in the midcap and smallcap space.
Traders get caught on the wrong side even during a normal corrective phase when they don’t have an exit plan in place.
We suggest keeping an extra focus on the selection of stocks and overnight risk management.
Dharmesh Shah, Head – Technical, ICICI direct
Nifty approached our target of 11,700 on expected lines, after resolving out of the past four weeks' consolidation (11,100-11,400). As a result, the index formed a sizable bull candle with a higher high-low, indicating extended upward momentum.
Going ahead, sustainability above 11,700-mark supported by multi-sector participation would be key monitorable to revise the target towards the psychological mark of 12,000 in the coming weeks.
The absence of such broad-based participation would lead to consolidation in the 11,700-11,300 range amid stock-specific action as the index has gained 5 percent in the past two weeks.
Our extended target of 12,000 is based on the fact that the negative gap was seen on February 24, 2020, in the range of 12,080-12,012.
Besides, during ongoing up-move off June low of 9,544, internal rallies were of nearly 800 points. Thus, a projection of 800 points up-move from last week’s low (11,144) is placed at 11,944.
Sameet Chavan. Chief Analyst -Technical and Derivatives, Angel Broking
The ongoing rally across the globe is just extraordinary. Although we are not actively participating in index-specific trades since last week (after 11,350-11,400) or so, the focus remained on individual stocks.
At the same time, we are advocating booking timely profits on trades as well and we would continue to do so.
After a certain time, it’s always better to let go of some move and focus on money management.
As far as levels are concerned, 11,700-11,750 remains to be an immediate hurdle, whereas 11,600 followed by 11,540 would be seen as key support levels.
Since we have approached yet another cluster of resistances, we continue to advise some caution at higher levels. It is better to take one step at a time and keep a close eye on key levels.
Siddharth Khemka, Head – Retail Research, Motilal Oswal Financial Services
Going ahead, markets are likely to continue their upward trend in the near-term with more sector and stock-specific actions.
However, intermittent profit-booking may not be ruled out. Strong global cues led by positive news flows around vaccine development, further stimulus announcement and further ease in tensions between US-China would support the positive momentum.
Technically, Nifty’s major trend is positive and likely to commence the next leg of the rally towards 12,000.
Gradual cooling in volatility (VIX index) on a weekly basis also suggests a bullish stance.
In the coming week, investors would keep an eye on US PMI data along with Non-farm payroll data. On the domestic front, the most important Q1 GDP data, infrastructure output and PMI data along with monthly auto numbers would provide further direction to the market.
Joseph Thomas, Head of Research - Emkay Wealth Management
The robust global sentiments and steady flow of FII money led to sharp gains in domestic markets last week.
The expectations of a vaccine to be available soon and the positive developments on trade deal front between the US and China were the key factors fuelling the risk-on sentiment.
Given the sharp movement in the equity markets, the possibility of some profit-booking cannot be ruled out as the markets reopen after the weekend.
Having said that, the markets are likely to remain well supported over the near-term on the back of plush liquidity and the gradually improving business lead indicators.
Nirali Shah, Senior Research Analyst, Samco Securities
In the coming weeks, Mr. Market would largely take cues from global indices on the lack of any major domestic signal.
Given that the current pandemic has accentuated the effects of the intertwining of economies, domestic bourses would tend to mirror global indices.
For the week ahead, markets may watch out for August auto sales numbers from India Inc. which might broadly act as a proxy for the health of our ailing economy, to an extent.
Currently, markets seem to be in a position where it will be highly unlikely that any major movement will take place at the Index level, however, stock and sector-specific rotations will be at an all-time high.
Traders are advised to ride the rally and investors are recommended to stay put in the equities and deploy surplus liquidity only when the market corrects sharply.Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.