Markets This Week: Domestic equity index Nifty snapped an eight-day winning run on Friday but managed to end in the green on the weekly scale. Interest rate-sensitive sectors such as banking, auto & realty stocks witnessed heavy profit-taking. NSE volumes were higher than the average of the last few months, suggesting aggressive selling after a sustained rise.
Ajit Mishra, VP – Research, Religare Broking Ltd. said: “Markets ended marginally in the green last week as profit-taking on Friday trimmed all the gains. The tone was upbeat for most of the week, tracking favourable global markets and continuous buying from foreign investors. However, the decline on the final day engulfed the gains of the last 3 sessions as participants preferred to book some profits off the table. Consequently, the benchmark indices, Nifty and Sensex, lost the majority of the weekly gains and settled at 17,758 and 59,646 respectively. Most sectoral indices traded in tandem and ended flat to slightly higher. However, realty and FMCG managed to post decent gains. Amid all, the broader indices, midcap and smallcap, too witnessed profit booking.”
In the coming week, the scheduled derivatives expiry will keep the participants busy. Besides, global cues especially from the US and figures of foreign flows will remain on the radar.
FII Funds Flow
Foreign Institutional Investors (FIIs) remained consistent buyers this month, barring one day when they were looking net sellers may be due to stake sale in Sona Comstar by Blackstone on August 18. They have bought nearly Rs 18,000 crore worth of shares in the current month, whereas DIIs have taken that strong market mood opportunity to book some profits by selling more than Rs 6,000 crore worth of shares during the month.
US Dollar Index
The movement in the US dollar index, which measures the value of the US dollar against a basket of the world’s leading currencies, will also be important to focus on, especially after the recent recovery in the DXY.
After its recent bottom, the US dollar index resumed rally again, rising 2.86 percent in last more than a week period to close at 108.10 on Friday as the possibility for another 75 bps hike in the September policy meeting seems to be increasing.
With the concerns over the demand outlook amid rising fears of a recession in the US and Europe, Brent crude prices have gradually been declining and trading around a six-month low. Hence, the oil price movement will be closely watched by the street in the coming weeks.
International benchmark Brent crude futures closed at $96.72 a barrel last week, down 1.5 per cent on week-on-week, while the prices corrected nearly 22 per cent in the last more than two months period.
Santosh Meena, head of research at Swastika Investmart Ltd., said: “Technically, the Nifty is pausing near the psychological hurdle of 18,000 whereas 18,000-18,100 is the resistance area and there is a risk of some profit booking as most of the momentum indicators are showing overbought reading however 17,700 is an immediate and important support which bulls will try to protect. Below 17,700, profit booking may see an extension towards the next demand zone of 17,450-17,200.”
Bank Nifty is witnessing profit booking from the level of 39,750 however 38,800 is an immediate support level where we can expect a bounce-back while if it slips below 38,800 level then 38,300-38,000 will be the next demand zone, Meena said.
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