Weekly Trend Report
- 05th August 2024
Week Gone By
During the week, key equity barometers ended the week lower after Friday’s market correction, breaking an eight-week gaining streak. The Nifty 50 settled above 24,750 levels. In the week ending on Friday the S&P BSE Sensex fell 350.77 points to settle at 80,981.95 while the Nifty 50 index declined 117.15 points to settle at 24,717.70. The BSE Midcap index declined 0.07% to 47,675.23 whereas BSE Smallcap jumped 0.62% to close at 54,629.29. During the week the Finance Minister presented the fiscal deficit target at 4.9%. The Bank of Japan has raised its policy rate to 0.25% and plans to cut its bond-buying program by 400 billion yen per quarter, reducing monthly purchases of Japanese Government Bonds to 3 trillion yen from January to March 2026, while China’s manufacturing sector contracted for the third consecutive month in July, with the PMI falling to 49.4 due to ongoing weak domestic demand despite government support.
Week Ahead
During the upcoming week The Reserve Bank of India will announce its interest rate decision on August 8, 2024, after keeping the repo rate at 6.5% for eight straight meetings amid ongoing inflation and a resilient economy. Globally, China will release its July balance of trade data on August 8, 2024, following a June trade surplus surge to $99.05 billion, and its July inflation data on August 9, 2024, with the annual inflation rate edging down to 0.2% in June from 0.3% previously.
Technical Overview
- At the outset of the trading week, the 50 index exhibited subdued activity and approached the psychologically significant 25000 level, yet ultimately yielded to corrective pressure.
- Consequently, a narrow trading range persisted, reflecting the absence of a discernible trend in the initial half of the week.
- Notably, the Nifty50 index registered a close below the prior day’s low for the first time in the last 41 trading sessions, albeit on relatively lower volume, thereby evading a distribution day despite a 293-point decline in closing.
- While most broader and sectoral indices sustained a confirmed uptrend, exceptions were observed in the Smallcap, Nifty50, Metal, Realty, and PSU indices, which traded with their respective uptrends under pressure.
- It is worth noting that the number of stocks trading above their 10-day moving average surpassed the 50% threshold, before receding marginally below the bullish zone, while those trading above their 20-day moving average maintained their position within the bullish zone.
- Additionally, stocks trading above their 200-day moving average consistently upheld a level above the 80% threshold for two consecutive weeks, indicating potential for strengthened stock participation in supporting the market’s uptrend.
- Although the momentum breadth remained positive but mild, a negative slope in its 5-day ratio during the latter part of the week alluded to insufficient stock participation. A potential enhancement in momentum breadth in the upcoming week could serve to confirm bullish strength in the market.
- The swing confidence level persists at 25, signifying that the portfolio is capable of withstanding only the minimum permissible open risk at this time. The stocks that hold well during market corrections will be the first ones to breakout to new highs when the momentum returns.
- From a technical perspective, it is evident that the 25000 level has evolved into an intermediate top for the markets, with the absence of a pronounced upside trend unless this level is convincingly surpassed.
- The trading range is forecast to widen in the coming days, with the 25000-25100 range projected to act as immediate overhead resistance, while the levels of 24500 and 24200 are expected to serve as support levels.
To view the detailed report click here to Download
