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Published: September 4, 2023
Updated: September 4, 2023

Market Outlook: Factors Shaping the Week Ahead

Recovery Amidst Volatility

After five consecutive weeks of losses, the Indian stock market staged a remarkable comeback, registering its most substantial single-day gain in two months. The Sensex surged by approximately 556 points on the first day of September, marking its best single- day performance in two months. The Nifty also closed above the 19,400 mark, driven by value buying in power, metal, and oil stocks. This resurgence was fueled by robust domestic macro data and positive global cues.

Economic Growth Sparks Hope

The turning point in the market's performance came after India's gross domestic product (GDP) data for the April-June quarter revealed that the economy grew at its fastest rate in a year. This positive development is expected to boost foreign fund inflows. As a result, Nifty saw a significant rebound, closing near its weekly high at 19,435.30 levels.

Record Highs and Changes

During the week, both the BSE Midcap and Smallcap indices achieved fresh record highs of 31,461.26 and 37,460.24, respectively. Notably, Jio Financial Services shares were removed from all S&P BSE indices, including Sensex, starting from September 1.

Sectoral Performance

The market's revival was accompanied by robust performances in specific sectors. Realty, auto, and metal sectors posted impressive gains ranging from 3.5 percent to 5.5 percent. Conversely, defensive sectors like pharma and FMCG ended the week in the red. The continued buying in the midcap and smallcap segments remained a prominent feature.

Mixed Sentiments and Global Factors

Investor sentiments remained uncertain, influenced by mixed market trends both domestically and globally. Concerns about the progress of US policy measures weighed on markets following the Federal Reserve Chair's commitment to managing inflation within target bounds.

What Lies Ahead

In the upcoming week, the primary market will be bustling with four new public issues open for bidding, along with four listings across the mainboard and SME segments. With no major domestic triggers in sight, market sentiments will largely depend on global cues, including PMI data and US economic indicators.

Key Triggers for the Week Ahead

1. Macro Data: India's impressive GDP growth, manufacturing PMI, fiscal deficit, and core sector growth will be closely monitored. Global indicators such as Euro zone GDP and US economic data will also be significant drivers.

2. IPOs and Listings: Four IPOs are set to hit the market, including Ratnaveer Precision Engineering, Jupiter Life Line Hospitals, EMS Limited, and Kahan Packaging. Additionally, four new listings are expected.

3. FII Inflow: Foreign institutional investors (FIIs) are showing positive signs following India's economic growth data. Their activities will be closely observed, considering the recent moderation in foreign inflows.

4. Global Cues: US nonfarm payroll data, jobless data, and PMI data will be crucial for market direction. The strength of the dollar index and US bond yields will also play pivotal roles.

5. Oil Prices: Oil prices are expected to remain in focus due to tightening supplies and geopolitical factors.

6. Corporate Actions: Several companies will trade ex-dividend, and others will trade ex- bonus during the week.

Technical View: Analysts suggest selective buying across sectors and emphasise auto, metal, and IT for long trades. Support and resistance levels will be closely monitored to gauge market trends.

The week ahead promises an intriguing mix of economic data, market movements, and global factors that will shape investor sentiment. The recent rebound in the Indian stock market provides hope, but caution remains essential in navigating this ever-evolving landscape.