Key market triggers this week include FOMC minutes, macro data, Chairman Powell’s Jackson Hole speech, and FII activity

Indian stock markets rebounded by the end of last week after a correction in stock indexes due to caution over the Hindenburg-Adani standoff and weak factory production. Investors will be focusing on domestic and international macroeconomic data, the proceedings of the US Congress, the Fed Chairman’s speech at Jackson Hole, foreign capital inflows, crude oil prices and global indicators in the coming week.

Earlier, domestic equity indexes Sensex and Nifty 50 indexes had started the week on a subdued note amid mixed signals and witnessed high volatility as pressure on some large cap stocks worsened market sentiment mid-week.

“Throughout this week, the market has been under pressure due to ‘sell on the upside’ structures due to concerns generated by the Hindenburg report, high valuations and some disappointing earnings,” said Santosh Meena, head of research at Swastika Investmart.

Read also: Q1FY25 Review: Nifty 50 achieves single-digit EBITDA growth for the first time in four years; Auto, Banking lead the way

However, a sharp recovery the previous day swung momentum back in favour of the bulls, with the benchmark indices closing near their weekly highs.Friday’s gains reversed the entire weekly loss, with both the Nifty and Sensex closing up around 1%.

The major equity indexes reversed their downward trend this week, ending two weeks of losses. The Nifty 50 rose 0.71% and the Sensex gained 0.91% to close at 24,541.15 and 80,436.84 respectively. The NSE benchmarks hit their highest close since July 26, while the Sensex recorded its biggest single-day gain in over two months.

Among the major sector indices, IT saw the biggest gains, followed by real estate and auto, while energy and metals ended lower. Broader indices also recovered losses, with the midcap index rising nearly 1% and the smallcap index ending almost flat. The IT index has risen 5% this week on hopes of easier monetary policy from the US Federal Reserve.

“Q1FY25 earnings were broadly in line with expectations with single-digit PAT growth. However, Nifty EPS estimates for FY25 may be lowered due to weak performance from oil and cement companies. We advise investors to remain cautious in the short to medium term. Value stocks in sectors like FMCG, IT, pharma and telecom will be in focus,” said Vinod Nair, head of research at Geojit Financial Services.

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The primary market will remain active this week with several Initial Public Offerings (IPOs) and listings scheduled across the main board and Small and Medium Enterprises (SME) segments. This will be a very important week from a domestic and technology perspective as investors track global markets, industry announcements and macroeconomic data.

Overall, D Street experts say that the domestic market sentiment remains positive after moving out of the consolidation phase. They expect the upward momentum to continue as bulls are helping the Nifty 50 reclaim the 25,000 levels. Experts advise traders to be selective in their picks and “buy low”.

Here are the key catalysts for the stock market over the next week.

Macro Data

Domestically, market participants will keep a close eye on institutional inflows and upcoming economic data such as HSBC India Manufacturing PMI and HSBC India Services PMI to gauge direction. Infrastructure projects and industry-related announcements could trigger movements in certain stocks.

Seven new IPOs, five listings hit D Street

In the main board sector, two new IPOs — Interarch Building Products IPO and Orient Technologies IPO — will open for subscription this week, while in the SME sector, five new issues — Brace Port Logistics IPO, Forcas Studio IPO, QVC Exports IPO, Ideal Technoplast Industries IPO and Resourceful Automobile IPO — will open for subscription this week.

Of the listed stocks, shares of Saraswati Saree Depot are expected to be listed on the BSE and NSE this week, while shares of Solve Plastic Products, Broach Lifecare Hospital, Sunlite Recycling Industries and Positron Energy will be listed on the BSE SME or NSE SME.

Read also: Interarch Building Products IPO: Steel giants mobilize ₹Raised Rs 1,790 crore from anchor investors prior to the offer launch

FII Activities

Foreign institutional investors (FIIs) were net sellers, ₹Last week, buying in the cash segment was worth Rs 8,616 crore. Meanwhile, domestic institutional investors (DIIs) maintained their buying momentum, ₹10,560 crore in the cash segment.

Foreign institutional investors turned net sellers in index futures last week, but Friday’s trading session saw significant short covering, pushing the long/short ratio to 50/50.

Foreign Portfolio Investors (FPIs) turned net sellers in August after two consecutive months of buying in Indian equities due to domestic and international factors. However, they were consistent buyers in June and July as stability returned to Indian markets. However, FPIs stopped buying with the start of the new financial year 2024-25 (FY25).

FPI Sale ₹Indian stocks worth Rs 21,201 crore saw net outflows. ₹According to data from National Securities Depository Center (NSDL), as of August 16, the total investment taking into account debt, hybrid, debt VRR and equity was Rs 9,653 crore. The total investment in the debt market was ₹9,112 crore till August.

Read also: Federal Reserve to cut interest rates by 50 basis points in September or risk recession: Expert

Global Queue

After a strong showing in global economic data last week, investors will likely turn their attention back to global markets for data, especially as a strong recovery in the U.S. market has eased fears of a recession in the world’s largest economy.

“The US growth outlook remains a key risk to monitor. Cash is the most at risk during the Fed rate cutting cycle. The ideal scenario would be to lock in opportunities in bonds and earn income over a longer time horizon. Gold would benefit from lower interest rates and bond yields,” said Raj Patel, CMO at multi-asset trading platform MintCFD.

Key global economic data such as Japan’s inflation rate and the minutes of the Federal Open Market Committee (FOMC) will be in focus. Uncertain geopolitical conditions remain the main short-term risk for the market. Traders will also closely monitor institutional flows and oil price developments.

“Concerns over a reversal in the yen carry trade have eased and worries over a possible US recession have been alleviated by strong retail sales numbers and better-than-expected employment data. The market is now fully pricing in a 25 basis points rate cut from the US Federal Reserve in September, further boosting investor confidence,” said Santosh Meena of Swastika Investmarts.

Analysts said global markets were buoyed by improved US retail sales data and a drop in weekly jobless claims. Moreover, easing in US Consumer Price Index (CPI) inflation and a decline in the US 10-year Treasury yield helped the shortened week end on a positive note.

“Over the next week, markets will closely monitor Fed Chairman Powell’s speech at Jackson Hole and the FOMC minutes. An easing in the economic slowdown may prompt the chairman to further explain the rate trajectory. Improving sentiment in yen carry trade is likely to reduce market volatility in the near term,” said Vinod Nair of Geojit.

Oil prices

International oil prices fell about 2% in yesterday’s trading, with Brent crude dropping below $80 a barrel, as investors tempered expectations of rising demand from China, the largest oil importer. Oil prices were little changed throughout the week after Wall Street backed off expectations of an interest rate cut from the U.S. Federal Reserve.

Brent Crude Oil futures fell $1.36, or 1.7%, to close at $79.68 a barrel. U.S. WTI Crude Oil futures fell $1.51, or 1.9%, to $76.65. Last week, Brent Crude Oil closed at $79.66 a barrel, while WTI closed at $76.84. As for domestic prices, crude oil futures fell 0.6% to close at $79.68 a barrel. ₹6,448 per barrel on the Multi Commodity Exchange (MCX).

Corporate Behavior

Next week will be a flurry of corporate actions with a host of blue chip and public sector undertakings (PSUs) going ex-dividend from Monday, August 19. Reliance Industries, IRCTC, ABB India, LIC Housing Finance, IRCTC, Dr Lal Pathlabs, IRFC, Jindal Steel & Power, Hindustan Aeronautics (HAL), Pfizer and Oil and Natural Gas Corporation (ONGC) are among the stocks going ex-dividend next week. Several companies have also announced other corporate actions like share buybacks, bonus issues, stock splits etc. Check the complete list here.

Technical View

D Street experts said that following the sharp rebound in global equity indices, the Nifty 50 has emerged from a consolidation phase and reclaimed its short-term moving average, the 20-day EMA.

“It looks like there is a chance of closing the gap near 24,700 and then a rise towards the all-time high of 25,078. In case of any dip, the 24,300-24,400 zone will provide an immediate cushion while the 50-day EMA at 24,000 is expected to remain viable as key support,” Ajit Mishra, SVP, Research, Religare Broking Ltd said.

“Given selective participation in the market, the focus should remain on stock selection, prioritising IT, FMCG, some private banking giants and being selective in other sectors,” Mishra added.

Santosh Meena of Swastika Investmart agrees: “On the technical chart, Nifty finally managed to break out of the consolidation range between the 50-day and 20-day moving averages and closed above the 20-day moving average. This breakout is likely to lead to further bullish momentum with the 24,800-25,000 zone being the key resistance area.”

Parka Arora Chopra, director, Master Capital Services Ltd, recommends a buy-low strategy. “The Nifty 50 index had been stable since August 5 but broke out of the range on Friday and has breached the ascending channel on the daily chart. The weekly candlestick is looking strong and bullish, indicating that the upward momentum is likely to continue next week as well. The index is currently above 24,600 and may move towards 24,800,” she said.

The Nifty Bank index has reversed from a low of 49,642 and formed a double bottom pattern on the daily chart, offering strong support, while a Doji candlestick has formed on the weekly chart, indicating indecisiveness and possible upside.

“A break above 50,800 can send the index surging towards 51,300. Strong support has been established at 50,200 and a break below this level can see it decline towards 49,700. Overall, market sentiment remains bullish and a buy-low strategy is favourable,” Chopra added.

Disclaimer: Any views or recommendations provided in this analysis are those of the individual analyst or brokerage firm, and not of Mint. Because market conditions change rapidly and individual circumstances may vary, investors are strongly advised to consult with a qualified professional before making any investment decisions.’