Weekly Trend Report
- 10th September 2024
Week Gone By
Domestic equity indices witnessed modest losses during the week, snapping a three-week rising streak. The Nifty slipped 383.75 points to at 24,852.15. The broader market continued to stage outperformance for yet another week. Meanwhile, HSBC India’s PMI for August was 57.5, down from July but above its long-term average. On the global front, China’s Caixin PMI fell to a six-month low of 49.1. South Korea’s headline inflation eased to 2%, its lowest since March 2021, while Japan’s household spending showed a modest 0.1% increase in real terms compared to the previous year. In the US, manufacturing continued to contract with the ISM PMI at 47.2, and job openings fell to 7.67 million, the lowest since early 2021, highlighting potential challenges for the economy.
Week Ahead
Investors will closely monitor both foreign and domestic institutional activities, along with rupee’s movement against the dollar and crude oil prices, to gauge market sentiment. Key upcoming events include India’s industrial production and consumer inflation data, both releasing on 12 September 2024. China’s inflation data will be out on 9 September 2024, and the US will release August inflation and producer price data on 11 and 12 September 2024, respectively. Additionally, the University of Michigan consumer sentiment data for September will be available on 13 September 2024.
Technical Overview
- The benchmark index commenced the trading week on a positive note and scaled to life highs of 25333 and marked an intermediate top for the week. The index succumbed to selling pressure on Monday itself and trended lower throughout the week.
- Notably on Friday the index was observed to be losing its selling momentum as the session progressed into its second half. The index closed the week with a cut of 383 points.
- In the interim it breached the psychological support of 25000 and takes immediate support at its 20 day MA currently trading near 24821.
- The VIX increased 13.6% during the week and the pessimism is anticipated to augment on crossing the readings of 16.
- The week saw most sectorial and thematic indices closing with their uptrends under pressure and the momentum further deteriorating.
- On the market breadth front, the populace of stocks trading above their 50 and 200 daily MA continue to trade above the 50% threshold which is a positive sign.
- However, those trading above their 10 and 20 daily MA were observed to be retracing below the 50% threshold. This indicates the intermediate momentum are observing mild pressure.
- The momentum market breadth remained positive throughout the week before the markets witnessed a deeper cut on the Friday.
- The 5 day ratio of the momentum market breadth continues to trail above the threshold limit, which is a positive sign.
- The market breadth volume remained dried throughout the week indicating the continuation of the theme of selective stock participation.
- On the technical front, the supports are now dragged lower to 24750 and 24600. It will be crucial that the index continues to sustain above this zone to limit the further drawdowns.
- The swing confidence remains low which means the portfolios must take minimum permissible risk and have a prudent stock specific approach for the coming week.
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