GIFT Nifty traded 0.22% higher during Monday’s early trading session at 19,279, indicating a positive opening for domestic indices NSE Nifty 50 and BSE Sensex. The equity benchmarks closed in the red on Friday. Sensex tanked over 350 points to close at 64,886.51, while Nifty 50 slipped 0.62% to end trade at 19,265.80.
“The domestic market experienced another week of losses as investor sentiment was influenced by the Jackson Hole meeting outcome. Investors are eagerly awaiting insights from Fed officials to gauge the future prospects of rate hikes. Despite a slight softening due to a weak US PMI, US bond yields remained elevated. The US Manufacturing PMI, registering at 47 against an expected 49.3, sparked hopes for an extended rate hike pause. Sectors closely tied to the Western economy, like IT and pharma, experienced increased volatility, while domestically-focused mid- and small-cap stocks demonstrated resilience and gained momentum,” said Vinod Nair, Head of Research at Geojit Financial Services.
Asian Markets
Stock markets across the Asia-Pacific region surged in trade on Monday as China announced new measures to support its ailing markets, though the mood was cautious ahead of readings on U.S. jobs and inflation could decide whether interest rates have to rise again.
Chinese indices Shanghai Composite and Shenzhen Component jumped 5% and 5.63% respectively. Japan’s Nikkei-225 added 1.5%, while Hong Kong’s Hang Seng index surged 3.16%. South Korea’s KOSPI added 0.85% while the Taiwan index rose by 0.34%.
Crude Oil
Oil prices ticked higher on Monday, along with equity markets, after China took steps to support its flagging economy, though investors remained worried about the pace of growth as well as further U.S. interest rate hikes that could dampen fuel demand.
FII/DII Data
Foreign institutional investors (FII) sold shares worth net Rs 4,638.21 crore, while domestic institutional investors (DII) bought shares worth net Rs 1,414.35 crore on 25 August, according to the provisional data available on the NSE.
F&O Ban
The National Stock Exchange has Escorts Kubota, SUN TV, GMR Airports Infrastructure, RBL Bank, Hindustan Copper, Manappuram Finance, India Cements and BHEL securities on its F&O ban list for 28 August. According to the NSE, stocks are prohibited in the F&O sector when they have exceeded 95% of the market-wide position limit (MWPL). During the F&O ban period, no new positions are permitted for F&O contracts in that stock.
Bank Nifty Outlook
“The pullback rally in Bank Nifty has fizzled out at the 44,900 – 45,000 zone where resistance in the form of the 50% Fibonacci retracement level was placed. The daily and the hourly momentum indicators provide divergent signal and hence a consolidation is likely. The range of consolidation is likely to be 44,800 – 43,900,” said Jatin Gedia – Technical Research Analyst at Sharekhan by BNP Paribas.
Technical View
“Nifty breached its 50 days SMA for the first time since April 2023. Nifty also breached the previous swing low support. Violation of 50 days SMA indicates higher probability of bearish trend to continue in the Index. Next support for the Nifty is seen in the zone of 19050-19100. On the upside 50 days SMA, placed at 19375 would act as a resistance now. Short term trend of the Nifty is likely to remain bearish till it closed above 19375,” said Devarsh Vakil, Deputy Head of Retail Research, HDFC Securities.
Fed Chair Speech
Federal Reserve Chair Jerome Powell on Friday did little to dissuade markets from the “higher for longer” mantra for rates that has driven up Treasury yields in recent weeks, leaving some investors looking for more cautious bets in case the economy is unable to escape a downturn next year.
Speaking at the Kansas City Fed’s annual gathering in Jackson Hole, Wyoming, Powell left open the possibility of further rate increases and stressed the U.S. economy’s surprising strength, though he acknowledged declines in the pace of inflation over the past year.
(With agency inputs.)