Week Ahead: India Q1 GDP, F&O expiry, macro data, global cues among key market triggers this week

Indian stock markets moved closer to record highs by the end of last week, supported by mostly favourable cues amid improving global sentiments. In the last week of August, investors will eye upcoming domestic and global macroeconomic data, India's economic growth numbers, foreign fund inflow, crude oil prices, and global cues.

Domestic benchmarks rose for a seventh session on Friday, their longest rally this year. However, the magnitude of the gains eased as caution set in ahead of US Federal Reserve Chair Jerome Powell's speech at Jackson Hole. The overall sentiment was positive initially, but mixed trends among the heavyweights limited the gains. Nifty 50 and Sensex ended near the week's highs.

Also Read: US Fed Chair Jackson Hole 2024 Highlights: Powell says ‘time has come’ for Fed to slash interest rates, stocks rally

Sensex and Nifty 50 have gained about three per cent in the past seven sessions on rising bets of a US rate cut and sustained domestic inflows. However, about half of those gains came on day two as US recession fears eased. Since then, the daily gains have eased, while the Nifty's trading range has narrowed to under 100 points in the last two sessions.

‘’Domestic emotions, nevertheless, remained optimistic as investors anticipated a robust earnings rebound following the first quarter of the 2024–2025 fiscal year's earnings report, which showed only a moderate year-over-year rise,'' said Palka Arora Chopra, Director of Master Capital Services Ltd.

Also Read: RBI MPC Minutes: Growth impulses allow policy to focus on disinflation, food inflation sticky to core; 5 key highlights

The frontline indices had extended their winning streak for a second consecutive week, hitting a three-week high, although broader markets underperformed and market breadth favoured declines. Global market sentiments improved following the better-than-expected US economic numbers.

‘’The Indian stock market is expected to follow gains seen in the US stock market, as the likelihood of a "soft landing" for the global economy increases amid signs of economic softening. A potential rate cut by the Fed would likely boost market sentiment and drive up stock prices,'' said Pravesh Gour, Senior Technical Analyst at Swastika Investmart Ltd.

Rising for the fourth straight session, the 30-share BSE Sensex index ended 33.02 points or 0.04 per cent higher at 81,086.21. The NSE Nifty 50 edged up 11.65 points or 0.05 per cent to close at 24,823.15, registering gains for the seventh session in a row.

All major sectors, except real estate, participated in the rally, with metals, FMCG, and financial services leading the gains. Powell's speech at the Jackson Hole Economic Symposium on Friday evening clearly signalled that the central bank would cut its interest rate in the September meeting.

‘’A rate cut of up to 25 bps in September is anticipated; if confirmed, it will be taken positively by the market in the short term. The further trend will depend on the optimistic view of the central banks that the accommodative policy will be sustained, guiding further cuts in the coming policies,'' said Vinod Nair, Head of Research, Geojit Financial Services.

Also Read: Baazar Style Retail IPO: Rekha Jhunjhunwala-backed IPO to hit D-Street on August 30; Check issue size, key dates

Primary markets will see further action this week as some new initial public offerings (IPO) and listings are slated across the mainboard and small and medium enterprises (SME) segments. The week will be critical from the domestic and technical point of view as investors will track global markets and macroeconomic data.

Overall, D-Street experts say the market's sentiment remains positive on improved global cues following Powell's bold rate cut indications. However, sustained participation from the banking sector is needed for Nifty 50 to breach the 25,500 mark. Some volatility is anticipated in the subsequent sessions due to the monthly F&O expiry rollover scheduled this week. Experts advise traders to remain stock selective and ‘buy on dips’.

Here are the key triggers for stock markets in the coming week:

Macro Data

India is set to reveal the gross domestic product (GDP) data of the April-June quarter (Q1) of current fiscal 2024-25 on Friday, August 30. Concurrently, the fiscal deficit and infrastructure sector output, both for the month of July, will also be disclosed in the coming week.
 

Also Read: GDP growth expected to moderate to six-quarter low of 6% in June quarter: ICRA
 

9 new IPOs, 8 listings to hit D-Street

Three new IPOs will open for subscription in the mainboard segment this week: Premier Energies IPO, ECOS (India) Mobility & Hospitality IPO, and Baazar Style Retail IPO. Five new issues will open in the SME segment this week: Indian Phosphate IPO, ay Bee Laminations IPO, Vdeal System IPO, Paramatrix Technologies IPO, Aeron Composite IPO, and Archit Nuwood Industries IPO. 

Among the listings, shares of Interarch Building Products Ltd and Orient Technologies Ltd will be listed on the BSE and NSE next week. Additionally, shares of Brace Port Logistics, Forcas Studio, QVC Exports, Ideal Technoplast Industries, Resourceful Automobile, and Rapid Multimodal Logistics will debut on the BSE SME or NSE SME this week. 

FII Activity

Foreign Institutional Investors (FIIs) were net sellers, offloading ₹1,608.89 crore in the cash segment this week. Meanwhile, domestic institutional investors (DIIs) maintained their buying momentum, acquiring ₹13,020.29 crore in the cash segment.

‘’The trend of FIIs buying stocks through the ‘primary market and others’ category and selling through the exchange continued last week. Bulk deals were also executed through the exchange,'' said Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

Also Read: FPI selling intensifies in financial sector; shift from high-valuation stocks to defensives

‘’The logic behind this divergent trend of selling through the exchange and buying through the primary market is the difference in valuations, i.e., lower valuations in the primary market and high valuations in the secondary market,'' added Dr. V K Vijayakumar.

Foreign portfolio investors (FPIs) sold ₹16,305 crore worth of Indian equities, and the net outflows stood at ₹3,070 crore as of August 23, taking into account debt, hybrid, debt-VRR, and equities, according to the National Securities Depository Ltd (NSDL) data. The total investment in debt markets stood at ₹11,366 crore so far in August.

‘’In the first fortnight of August FIIs were big sellers in financials in India. Selling was witnessed in many other sectors including metals on fears that economic slowdown in US and China will keep metal prices soft. FIIs were buyers in telecom and health care where the growth and earnings prospects are safe and bright,'' said the Geojit analyst.

Global Cues

On the global front, the US market has shown resilience, with US Fed Chair Jerome Powell indicating that the time has come for policy adjustments. He emphasized that the direction of future monetary policy is clear. Still, the timing and pace of rate cuts will depend on upcoming data, the evolving economic outlook, and the balance of risks.

Powell's comments suggested a dovish urgency, which has excited investors, with markets currently pricing in a 60 per cent chance of a 25 basis point rate cut in September and a 30 per cent chance of a more aggressive 50 basis point cut despite some lingering uncertainty. The US dollar index fell to near a nine-month low, while the 10-year bond yield approached near 14-month low.

‘’Market participants will first respond to the dovish remarks by the US Fed Chair at the Jackson Hole symposium. After a period of consolidation, US markets resumed their upward movement on Friday and seem poised to test record highs soon. Additionally, a weakening dollar and falling crude oil prices are added positive for our markets,'' said Ajit Mishra – SVP, Research, Religare Broking Ltd.

Also Read: Gold Rate Today Highlights: Yellow metal up 1% after US Fed chair Jerome Powell signals rate cuts at Jackson Hole

Investors are gearing up for next week, taking cues from global developments, particularly following US Federal Reserve Chair Jerome Powell's speech at the Jackson Hole symposium on Friday, August 23. Upcoming economic data releases from Japan and the US, along with movements in the global currency market, will be crucial factors for investors to watch.

On the global front, investors will keenly eye USA’s durable goods orders (MoM) for July, USA’s initial jobless claims for (Aug/24), Japan’s unemployment rate in July, Japan’s industrial production and consumer confidence data for July, USA’s core PCE price index (MoM) for July and USA’s personal spending and personal income data for July.

‘’Positive US economic data diminished the likelihood of a US recession. Moreover, positive global sentiment from ceasefire talks between Israel and Hamas, along with a decline in crude prices, contributed to the rally. However, inflationary pressure in Japan and the appreciation of the Yen tempered the market’s gains at the end,'' said Geojit's Vinod Nair.

Oil Prices

International crude oil prices settled two per cent higher in the previous session after hitting an eight-month low level during the week after US Federal Reserve Chairman Jerome Powell indicated that the ‘time has come’ for the central bank to change its policy and cut interest rates, while addressing the Jackson Hole Symposium in Wyoming on August 23.

Brent crude futures settled by $1.80, or 2.33 per cent, at $79.02 a barrel. US light crude oil or US West Texas Intermediate (WTI) crude futures finished up $1.82, or 2.49 per cent, at $74.83. Regarding domestic prices, crude oil futures settled 2.11 per cent higher at ₹6,288 per barrel on the multi-commodity exchange (MCX).

Corporate Action

Shares of several major companies are trading ex-dividend in the coming week starting from Monday, August 26, while some others have declared a buyback of shares. Shares of public-sector undertakings (PSUs) such as Oil India, Hindustan Zinc, MOIL Ltd are trading ex-dividend, while shares of other private companies are also trading ex-dividend. Check full list here

Technical View

Given the favorable global environment, analysts expect the Nifty 50 to overcome the resistance at 24,850 and aim for new record highs soon. ‘’However, sustained participation from the banking sector is needed to drive momentum and push towards the 25,500 level; otherwise, the upward move may be gradual,'' said Religare Brokings' Ajit Mishra.

‘’Traders should continue to adopt a ‘’buy on dips'' strategy unless the Nifty decisively falls below the 24,500 level. Besides banking, sectors like FMCG, auto, pharma, and selected metals appear promising, so trades should be aligned accordingly. Additionally, selective opportunities in the midcap and small-cap space can also be considered,'' said Mishra.

According to Pravesh Gour of Swastika Investmart, ‘’Nifty is gradually moving higher, but faces a significant resistance zone between 24,850-25,080. On the downside, the 24,700 to 24,650 range serves as immediate support, with 24,500 being the critical level to watch. A breakout above 25,000 or a drop below 24,500 could determine the next major trend in the market.''

According to Gour, Bank Nifty has established a strong base at its 100-day moving average (DMA) and is currently trading above the 20-day moving average (DMA). However, the 51,100 to 51,500 range is a crucial supply zone. A breakout above 51,500 or a dip below 50,500 will likely determine the next significant trend in the market.

According to Palka Arora Chopra of Master Capital Services, ‘’Nifty continues to display strength, with the bullish structure remaining intact. The momentum is expected to persist in the coming week, with a potential breakout above 24,900 likely driving the index towards the 25,100 and 25,400 levels. On the downside, the 24,350 level will now serve as critical weekly support.''

‘’Bank Nifty has delivered a robust weekly closing above its previous range. This suggests a potential increase in momentum in the coming week. A decisive breakout above the 51,100 level could propel the index toward the 52,000 mark. On the downside, strong support is identified at 50,300; a breach of this level may result in a decline toward 49,800,'' added Chopra.

Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and individual circumstances may vary.