NIFTY OUTLOOK FOR 2 AUG 2024

 

Overview: Indian benchmark indices extended their winning streak for the fifth consecutive session on August 1, 2024. The Sensex closed up by 126.21 points (0.15%) at 81,867.55, while the Nifty increased by 59.70 points (0.24%) to close at 25,010.90. This marks the first time the Nifty has closed above the 25,000 level.

Market Movement:

• The Nifty remained range-bound throughout the day, reflecting a cautious sentiment among traders. However, the index closed above the key psychological level of 25,000, supported by strong corporate earnings and positive global cues, particularly from the US markets.
• The Sensex also reached new highs, nearing the 82,000 mark, driven by gains in select sectors such as metals, oil & gas, and power.

Technical Analysis:

• The Nifty’s close above 25,000 signifies a continuation of the upward trend, breaking out of a recent sideways consolidation phase. The Relative Strength Index (RSI) indicates a bullish crossover, although it is approaching the overbought zone, suggesting a potential for profit booking.
• Immediate support for the Nifty is at 24,900, with resistance levels at 25,100 and 25,250. The index has formed a Spinning Top candlestick pattern, which often indicates indecision in the market.

Sectoral Performance:

• Gainers: Energy, metals, oil & gas, and power sectors were among the top performers. Stocks like Coal India, Power Grid Corp, Shriram Finance, Dr. Reddy's Labs, and ONGC led the gains in the Nifty index.
• Losers: The auto, capital goods, IT, media, telecom, PSU Bank, and realty sectors experienced declines, with stocks such as M&M, Hero MotoCorp, Tata Steel, Bajaj Finserv, and SBI being the major laggards.
• The BSE midcap and smallcap indices shed nearly 1% each, indicating a divergence in performance between large-cap and smaller-cap stocks.

Global and Domestic Factors:

• Positive cues from the US markets, influenced by indications from the Fed Chair about a possible rate cut in September, contributed to the positive sentiment in Indian markets. However, weak European market performance and mixed results from Asian indices limited the upside.
• Domestically, escalating geopolitical tensions in the Middle East and rising crude oil prices added to the market's cautious tone. This was further exacerbated by profit-taking in broader markets and underperformance in key sectors like banking.

Outlook:

• The market outlook remains cautiously optimistic, with traders encouraged by global market buoyancy and strong corporate earnings. However, the underperformance of banking stocks and profit-taking in broader indices pose challenges to sustaining the rally.
• The Nifty needs fresh triggers to break past its immediate resistance at 25,100. The approach remains to "buy on dips," with a focus on careful stock selection to navigate the current market dynamics.