[email protected] 18,000 next week? Watch out for these cues

Market


Indian stock markets ended higher on Friday, though off their intra-day highs. For the week, both Sensex and Nifty gained around 1.7%, logging their first weekly climb in three. The NSE Nifty 50 index closed at 17,833 on Friday while BSE Sensex rose to 59,793, after crossing 60,000 levels earlier in Friday’s session. Apart from global cues, Indian markets will be eyeing data Monday’s retail inflation data.

Indian equity markets may continue their northward journey amid supportive global cues, say some analysts.

Though some analysts are warning of expensive valuations, foreign investors are piling money into the market on expectations that growth for the Indian economy will be better compared to global peers. For the year, the Nifty 50 is up around 2.8%, while MSCI’s broadest index of Asia-Pacific shares outside Japan has declined 19.7%.

Also lifting investor sentiment is a slide in oil prices. India is the world’s third-largest importer of oil and benefits from a fall in prices as it brings down imported inflation.

Nifty, Bank Nifty outlook for next week:

Santosh Meena, Head of Research, Swastika Investmart Ltd.

“Indian equity market benchmark indices Nifty and Sensex break their two-week losing streak and continued their northward journey however previous week’s losses were minuscule and we were outperforming our global peers. The bullish momentum is likely to continue as global cues turned supportive. Strong FIIs’ flow and sharp fall in crude oil prices were key supporting factors for the Indian markets. If the flows from FIIs remain supportive then our market is likely to head towards new highs soon. This week market will have an eye on macro numbers where we will have our IIP and Inflation numbers while the US inflation number will play an important role.

Technically, Nifty has an immediate and psychological hurdle of 18000; above this, we can expect a rally towards 18350/18600 levels. On the downside, 20-DMA around 17700 will act as an immediate and strong support level while 17500 is a sacrosanct support level.

Bank Nifty is outperforming and has moved above the 40000 mark where 40800-41000 is an immediate and strong resistance zone; above this, we can expect a rally towards the 41800-42000 zone. On the downside, 40000-39500 will act as a strong demand zone.

If we look at the derivative data then the short positions of FIIs in the index future is still around 80%; therefore the market will also have the support of short covering rally.”

Ajit Mishra, VP – Research, Religare Broking Ltd

“Markets ended the 3-week long consolidation phase and posted decent gains, tracking favourable cues. Several factors like the easing of crude, consistent foreign inflows and rebound in the US markets in the latter part helped the index to inch higher. Consequently, both the benchmark indices, Nifty and Sensex, settled closer to the week’s high at 17,833 and 59,793 levels respectively. All sectors contributed to the move wherein banking and financials led the surge. The broader indices too witnessed decent traction and gained in the range of 2-3.5%.

Participants will be eyeing macroeconomic data viz. IIP, CPI and WPI next week for cues. Besides, the performance of the global markets especially the US would remain on their radar.

We’re now eyeing 18,100 in Nifty however mixed global cues may continue to trigger volatility in between. Since all the sectors are now aligned to the market trend, the focus should more on stock selection. We reiterate our preference for leaders like banking, financials, auto, and FMCG and suggest maintaining a selective approach to others. While the broader markets are also seeing decent traction, it’s prudent to stick with the quality names and avoid bottom fishing in laggards.”

Vinod Nair, Head of Research at Geojit Financial Services

“Bulls dominated domestic markets as the indices moved in tandem with developments in the global markets. Global indices edged higher as investors reassessed the outlook for monetary policy following ultra-hawkish remarks from the Fed chair and 75bps rate hikes by ECB. While the energy crisis in Europe continued to haunt investors, Chinese policymakers’ renewed efforts to strengthen its economy boded well for the Chinese bourses. In an effort to stabilize declining oil prices, OPEC+ opted to cut back on output given the faltering global growth outlook. Domestic investors held an upbeat outlook, bolstered by strengthening economic statistics, continued FII inflows, and rising corporate activity. Banking and consumption stocks remained top picks during the week.

The direction of the market in the week ahead will be determined by cues from the global markets as well as important macroeconomic data points, such as inflation and manufacturing & industrial production data, to be released next week. Domestic retail inflation is expected to rise to 6.9% in August from 6.71% in July.”

Amol Athawale, Deputy Vice President – Technical Research, Kotak Securities Ltd

“Although market pared gains, Sensex hitting the psychological 60000-mark intra-day signifies investors’ faith in the domestic economy. While stock markets may look a bit pricey, India’s long-term growth potential does bring some stability at a time when economic slowdown in key economies are staring at recession fears. On the dismissal of 18000, the Nifty can climb to the level of 18300 while it will find support at 17800 and 17600 levels. Below the same, Nifty would fall to 17400 or 17200 levels. We need to focus more on midcap and small-cap stocks. In the coming week, we are expecting profit taking in financial stocks and an outperformance in technology stocks.”

 

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