TEAM FINANCE | THE GOAN
Indian stock markets are likely to take direction from a combination of domestic economic data, global trends, crude oil prices and institutional buying and selling this week. Investors will closely watch India’s first-quarter GDP figures and the US non-farm payrolls report for signs of where the market could head next.On Friday, August 28, the Sensex and Nifty50 ended higher, breaking a two-session losing run. The Nifty50 gained 85 points, or 0.35%, to close at 24,178, while the Sensex rose 331 points, or 0.43%, to 77,264. Market breadth was positive, with 1,918 stocks gaining on the NSE compared with 1,561 that declined.
Analysts said the Nifty remains in a broader consolidation phase. While the weekly trend continues to have a positive bias, the index is facing resistance at higher levels.
GDP data
India’s first-quarter GDP figures will be among the key domestic factors this week. The data is expected to provide a clearer picture of economic growth.
An ET poll of 10 economists has put median GDP growth for April-June at 7.3%. Strong consumer spending, exports and government capital expenditure are expected to support growth despite supply disruptions and high commodity prices.
Hariselvan Radhakrishnan, Founder and CEO of HST Wealth, said investors would be watching several domestic and global economic indicators for fresh direction.
He said the GDP figures would provide clues about the domestic economy, while the US jobs data could influence global sentiment and expectations about the Federal Reserve’s September policy decision.
Vinod Nair, Head of Research at Geojit Investments, said business confidence indicators and GDP data would also be important for assessing the growth outlook and global interest-rate trends.
US jobs report
The US non-farm payrolls report, due on Friday, September 4, is expected to be closely watched by global investors.
Ponmudi R, CEO of Enrich Money, said the August jobs figures and the next US inflation reading would play an important role in shaping expectations about the Federal Reserve’s monetary policy.
Investors will also track the US dollar and Treasury yields. The rupee is another important factor for Indian markets. Nair said the cautious tone in the RBI’s August meeting minutes had kept pressure on domestic bond yields.
Oil prices and Strait of Hormuz
Crude oil prices are another major factor that could influence Indian equities. Developments around the Strait of Hormuz will be watched closely because any disruption to oil shipments could increase geopolitical risks.
Brent crude fell more than 5% last week and closed at $89.31 a barrel on Friday. Markets weighed stalled US-Iran talks against the return of some crude shipments through the Strait.
Ponmudi said a continued improvement in shipping could bring down the geopolitical premium in oil prices and support emerging-market shares. However, fresh disruptions could quickly push prices higher.
Nair said lower crude prices, a stronger rupee and softer US bond yields had helped limit the impact of geopolitical tensions on Indian equities.
Foreign and domestic flows
Buying and selling by foreign and domestic institutional investors will remain important.
Foreign institutional investors (FIIs) were heavy sellers on Friday, with net outflows of about Rs 5,040 crore. Domestic institutional investors (DIIs), however, bought shares worth around Rs 5,184 crore, largely offsetting the foreign selling.
So far this month, FIIs have remained marginal net buyers at around Rs 454 crore, while DII inflows have reached approximately Rs 79,620 crore.
Ponmudi said strong domestic institutional participation continues to provide stability to the market and reduce the impact of foreign selling.
AI boost
Indian IT stocks are likely to remain influenced by global technology trends. Strong results and positive guidance from Nvidia have strengthened expectations that spending on artificial intelligence will remain strong.
Nair said the IT sector benefited from the positive Nvidia outlook, particularly companies involved in enterprise AI and workflow integration.
Ponmudi also expects global technology sentiment to remain important. Results from Broadcom and Micron could influence movement between different technology sectors.
Metals, FMCG stocks
Commodity prices and global trends are expected to influence sectoral performance.
Nair said metal stocks gained on firm commodity prices and better expectations for realisations. At the same time, lower crude prices put pressure on upstream oil producers.
FMCG stocks also came under pressure as investors remained concerned about higher input costs.
Nifty at a crucial level
Technically, the Nifty remains in a consolidation phase with a mildly positive weekly trend.
Radhakrishnan said the index is above its 20-week moving average of 24,036 but below its 100-week moving average of 24,423. The weekly RSI at 50.07 remains neutral, while the MACD has recovered from negative levels.
A sustained close above 24,190-24,335 could take the Nifty towards 24,710. However, a fall below 24,000 could lead to further weakness.
Ponmudi identified 24,200-24,300 as the immediate resistance zone. A sustained move above 24,400 could open the way towards 24,500-24,600.
On the downside, 24,100-24,000 remains the key support area. A break below 24,000 could take the index towards 23,800.
