Top 5 Market Insights For The Week Ending August 16: Key Trends, IPOs, And Technical Analysis

Last updated on August 31st, 2024 at 12:06 am

Top 5 Market Insights for the Week Ending August 16

Top 5 Market Insights for the Week Ending August 16 — Image by Gerd Altmann from Pixabay

In the week ending August 16, the stock market improved after falling for two weeks. This was due to positive news, like reduced fears of a US recession, hopes for a possible interest rate cut by the US Federal Reserve, and a stable Japanese yen.

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Next week, the market is expected to stabilise with a positive outlook. Key things to watch are the minutes from the recent US Federal Reserve meeting, a speech by the Fed Chair, and global trends.

Last week, the BSE Sensex went up by 0.92% to 80,437, and the Nifty 50 rose by 0.71% to 24,541. The Nifty Midcap 100 index increased by 0.84%, and the Smallcap 100 index gained 0.14%.

Experts believe that the market will likely remain within a specific range and be influenced by global factors. They emphasize that geopolitical uncertainties and fluctuations in oil prices are important risks to monitor.

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Next week, everyone will be paying close attention to the minutes from the recent Federal Open Market Committee (FOMC) meeting and a speech by US Fed Chair Jerome Powell at the Jackson Hole Economic Symposium starting August 23. This annual event, hosted by the Kansas City Federal Reserve, will be watched carefully for clues about the Fed’s future monetary policy and its view on US economic growth.

Most experts expect the Fed to cut interest rates by 0.25% in September. However, some think a bigger cut of 0.50% might happen because inflation is falling and there are signs of a weaker job market.

At their last meeting in July, Fed officials noted that inflation was moving towards their 2% target but was still high. They want to be sure inflation consistently moves towards 2% before they start cutting rates. Powell mentioned that a rate cut in September is possible if inflation continues to decline as expected. In July, the Consumer Price Index (CPI) inflation dropped to 2.9%, the lowest since March 2021, down from 3% in June.

Next week, key domestic economic data will be released:

HSBC Manufacturing & Services PMI: On August 22, we’ll get the flash data for August. In July, the Manufacturing PMI was 58.1, slightly down from 58.3 in June, and the Services PMI was 60.3, down from 60.5 in June.

Bank Loan and Deposit Growth: Data for the two weeks ending August 9 will be released on August 23.

Foreign Exchange Reserves: The data for the week ending August 16 will also be released on August 23.

These figures will provide insights into the health of the manufacturing and services sectors, as well as trends in banking and foreign reserves.

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Market participants will closely watch the activities of Foreign Institutional Investors (FIIs) and Domestic Institutional Investors (DIIs).

Recently, FIIs have been net sellers in the Indian equity markets, having sold shares worth ₹8,616 crore last week. This brings their total outflow for August to ₹28,977 crore. On the other hand, DIIs have been active buyers, purchasing ₹10,560 crore worth of shares last week and ₹34,060 crore for the month of August.

VK Vijayakumar from Geojit Financial Services noted that the trend of FII selling might continue because India is currently one of the most expensive markets globally. As a result, foreign investors might prefer to move their money to cheaper markets, even if the Indian market becomes more optimistic due to reduced fears of a US recession.

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Next week, the primary market will see a flurry of activity with a total of seven IPOs set to launch, including two from the mainboard segment:

Interarch Building Products: ₹600-crore IPO opening on August 19.

Orient Technologies: ₹215-crore IPO opening on August 21.

In the SME segment, five IPOs will be launched:

Brace Port Logistics: Opening on August 19.
Forcas Studio: Also opening on August 19.
QVC Exports: Opening on August 21.
Ideal Technoplast Industries: Opening on August 21.
Resourceful Automobile: Opening on August 22.

These new offerings will add to the activity on Dalal Street and provide investors with more opportunities in both mainboard and SME sectors.

Next week, several new stocks will start trading:

Saraswati Saree Depot: Debuts on the BSE and NSE on August 20.
Sunlite Recycling Industries and Positron Energy: Both from the SME segment, will list their shares on August 20.
Solve Plastic Products and Broach Lifecare Hospital: Their shares will begin trading on August 21.

These listings will add to the activity in both the mainboard and SME segments.

Technical View

The Nifty 50 index appears to be in a strong position following a period of consolidation. After a strong rally on Friday, the index has moved above all key moving averages and the 50% Fibonacci retracement level (measured from its record high to the low in August).

Key technical indicators are:

Bullish Candlestick Pattern: The index formed a bullish pattern with a long lower shadow on both daily and weekly charts, signaling positive momentum.
Higher Highs and Higher Lows: The index is showing a pattern of higher highs and higher lows on both daily and weekly charts.

Targets and Support:

Target: The index seems poised to target 24,700. If it climbs above this level, it could close the bearish gap from August 5 and potentially move towards the psychological level of 25,000.
Support: On the downside, support is expected around 24,300 to 24,200.

F&O Cues:

Based on the weekly options data:

Resistance Zone: The 24,800 to 25,000 range is seen as a key resistance zone for the Nifty 50 on the upside.
Support Zone: The 24,400 to 24,300 range is expected to act as the support zone.

Options Data:

Call Options:

Maximum Open Interest: Highest at the 25,000 strike, followed by the 24,900 and 24,800 strikes.
Maximum Call Writing: Highest at the 25,000 strike, then the 24,900 and 24,800 strikes.

Put Options:

Maximum Open Interest: Highest at the 24,500 strike, followed by the 24,000 and 24,400 strikes.
Maximum Put Writing: Highest at the 24,500 strike, then the 24,400 and 24,300 strikes.
This data indicates that the 25,000 level is a significant resistance, while the 24,500 level is a strong support.

India VIX

Current Trend: The India VIX, which measures market volatility and investor fear, has dropped below the 15 mark and all key moving averages. This decline suggests reduced market fear and provides a more favorable environment for bullish market conditions.
Recent Movement: The VIX fell 6.08% during the week, from 15.34 to 14.4, ending a two-day streak of rising volatility.
As long as the VIX remains below 15, the trend is expected to remain supportive of a bullish outlook in the market.

Disclaimer: This information is for educational purposes only and not investment advice. Always consult with a financial advisor before making any investment decisions.