Weekly Trend Report
- 26th August 2024
Week Gone By
Domestic equity indices continued their upward trajectory for the second consecutive week. The Nifty settled above the 24,800 level. The broader market outperformed the benchmark indices during the week. Meanwhile, India’s foreign exchange reserves declined $4.8 billion to $670.119 billion for the week ended. In August, India’s Services PMI Business Activity Index slightly rose to 60.4, while the Composite PMI Output Index decreased to 60.5. On the global front, China’s lending rates stayed unchanged, Japan’s stock market gained on strong services data, and Japanese core CPI rose 2.7% YoY. The Fed’s meeting minutes suggested a September rate cut, but concerns over a revised U.S. payrolls data and a potential recession tempered optimism.
Week Ahead
Investors will watch institutional activities and crude oil prices for market sentiment, focusing on potential interest rate cuts. Key events include India’s Q2 GDP and infrastructure output data, both releasing on August 30, 2024, with the economy having grown 7.8% in Q1 and infrastructure output rising 4% YoY in June. US durable goods orders for July will be released on 26 August 2024, following a 6.6% drop in June. Japan’s consumer confidence data for August will be released on 30 August 2024, after rising to 36.7 in July.
Technical Overview
- The 50 index opened the trading week positively and experienced upward movement throughout the week, indicating a gradual recovery of bullish momentum following initial selling pressure at the start of the month.
- The week concluded with a 282-point increase compared to the previous week, and the VIX decreased by 5.9%, signaling reduced pessimism. While broader and thematic indices are facing some pressure on their respective uptrends, they are displaying positive and improving momentum, which is considered a favorable sign.
- In terms of market breadth, the number of stocks trading above their 10- and 20-day moving averages has consistently remained above the median level after reversing from oversold conditions, leading to a significant improvement in the 5-day momentum breadth ratio and indicating a recovery in momentum strength.
- Additionally, stocks trading above their 50- and 200-day moving averages continue to trend above median levels, reflecting positively on the market. However, lower market breadth volume implies selective stock participation and a lack of broad stock involvement.
- From a price action perspective, immediate support lies near a specified level, and maintaining levels above another specified point is deemed crucial.
- On the other hand, a specific zone is expected to act as immediate resistance, and a decisive reclamation of this zone is anticipated to sustain bullish momentum.
- Overall swing confidence is currently high, suggesting a stock-specific approach and slightly increased risk tolerance, although still within acceptable limits.
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