Weekly Market Wrap: D-Street declines for third straight week. What lies ahead?

Extending the losing streak for the third straight week, Indian equity benchmarks ended the week with a cut of around half a per cent after the central bank announced the status quo on the benchmark lending rate as well as its policy stance at its MPC meeting. Besides, some selling pressure also came as Moody's cut credit ratings of several small to mid-sized US banks and said it may downgrade some of the nation's biggest lenders.

The BSE Sensex slipped 399 points, or 0.61 per cent, at 65,323 during the week ended August 11, while the Nifty declined 89 points, or 0.45 per cent, to 19,428. Sector-wise, the BSE Metal index surged the most (1.1 per cent) during the week gone by. BSE Capital Goods and BSE Oil & Gas indices have registered a gain of 0.81 per cent, and 0.79 per cent, respectively. On the other hand, the BSE Bankex index has registered a weekly decline of 1.6 per cent.

As many as 23 stocks in the Nifty 50 index delivered a positive return for investors in the week. With a weekly gain of 5.5 per cent, Mahindra & Mahindra emerged as the top gainer in the index. It was followed by Titan Company (3.9 per cent), Tech Mahindra (3.8 per cent), Cipla (3.4 per cent), and SBI Life Insurance (3.3 per cent). Adani Ports, Dr. Reddy's Laboratories, HCL Technologies, and ONGC also advanced by over two per cent. On the other hand, Britannia Industries, Asian Paints, and Nestle India declined 6 per cent, 4.6 per cent, and 2.8 per cent, respectively.

Market Macros 

Vinod Nair, Head of Research at Geojit Financial Services said, the Indian market experienced bearishness during the week that focused on economic data as inflation concerns dented domestic sentiments. The week began with moderate gains, led by strong performances in the pharma and IT sectors.

However, uncertainties surrounding economic data releases and the RBI's policy announcement hindered substantial moves. Inflation worries resurfaced as the RBI raised their CPI forecast by 30 bps to 5.4 per cent, increasing the potential for a prolonged rate-cut trajectory.

He added: “Global markets faced volatility due to weak signals such as declining Chinese exports and the rating downgrade of US small and mid-sized banks”. Despite lower-than-expected US CPI and better-than-anticipated UK GDP figures, global market sentiment remained subdued. Amid rising inflation concerns, investors are closely monitoring the domestic CPI data for July, which is projected to show a significant increase due to rising food prices, Nair said.

Technical Outlook

Rupak De, Senior Technical Analyst at LKP Securities said, aside from the first hour, the Nifty remained predominantly rangebound, with the benchmark index slipping below 19500. However, it did not experience a significant correction as traders chose to stay on the sidelines due to the upcoming holidays.

From a technical standpoint: “The Nifty continues to exhibit a bearish trend as it remains below the 21-day Exponential Moving Average (21EMA). The Relative Strength Index (RSI) is also indicating a bearish crossover”. In the short term, there’s a possibility that the index might decline toward the 19300 level. On the upside, there’s a resistance level situated at 19,500, De said.

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