Weekly Trend Report
- 19th August 2024
Week Gone By
The stock indices experienced modest gains over the shortened week, breaking a two-week losing trend. The Sensex ended above 80,400, while the Nifty finished above 24,500. This recovery was driven by positive investor sentiment and selective buying in key sectors. Despite some volatility, the overall market trend was upward, reflecting renewed confidence among investors. The week also saw the release of important economic indicators, including the CPI at 3.54%, the WPI at 2.04%, as well as data on the trade deficit and IIP. For the past week, global markets experienced some notable gains on account of allayed fear of recession in the largest world economy driven by positive economic signals and overall stability in the market.
Week Ahead
With the Q1 earnings season concluding, investor’s attention will now be directed towards global developments. Market sentiment will continue to be influenced by the activities of institutional investors, including FIIs and DIIs. The overall market participants will now follow on the upcoming week’s economic data release , which will offer further clarity on the global economic scenario. Jerome Powell’s speech next week will be key to have a better outlook on the future market sentiments.
Technical Overview
- The 50 index opened the abbreviated trading week with subdued activity, remaining within a narrow 2% range and finding immediate support at 50 DMA, also known as institutional support.
- However, on Friday, the index exhibited a strong breakout from a two-week consolidation phase.
- Despite the sideways price action, the VIX experienced a 6% decrease during the week.
- Major broad and sectoral indices closed the week with their uptrend under pressure, although the negative momentum displayed signs of improvement, indicating a positive trend.
- The percentage of stocks trading above their 10- and 20-day moving averages attempted a reversal from the oversold territory, yet they continue to trade below the 50% threshold.
- Additionally, the percentage of stocks trading above their 50 DMA has dropped below median levels.
- On the momentum breadth front, stock participation remained subdued, with some relief observed on the final day of the week.
- This was also evidenced by the lack of market breadth volume, signaling lower stock participation.
- It is essential for the markets to observe follow-through to validate the potential commencement of a pullback.
- From a technical perspective, it is crucial to safeguard the 50 DMA currently trading near 24100 on a closing basis, as breaching below the average line will invite further selling pressure
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