Indian Stock Market Faces Volatility Amid Global Concerns and Domestic Indicators
The stock market in the upcoming week will be influenced by global events such as international market performance and fears of a recession in the US. Domestic factors like IIP, CPI, and WPI inflation data will also play a crucial role, according to market analysts.
Global and Domestic Focus
Ajit Mishra, SVP of Research at Religare Broking Ltd., stated that the market will closely watch global market performance, especially in the US, for directional cues. Domestically, the conclusion of the earnings season and key macroeconomic indicators will be significant.
Vinnaayak Mehta, Founder and Managing Partner of The Infinity Group, expressed confidence in the Indian markets, noting that while global factors may cause short-term volatility, the resilience of the Indian market offers a promising outlook for long-term investors.
Recent Market Performance
The stock markets experienced heightened volatility and closed lower for the second consecutive week on August 9. Both Nifty and Sensex indices registered significant losses during the opening trade on Monday, following a global downturn on August 5. However, the markets rebounded in the subsequent trading days.
Concerns over a potential US recession and escalating tensions in the Middle East triggered a sharp downturn on Monday. Despite some stability in global markets, both Nifty and Sensex fell approximately one and a half per cent each, settling at 24,367.50 and 79,705.91 respectively on Friday.
Sector Performance
Most sectors, excluding defensive sectors like pharma and FMCG, faced selling pressure. Metal, energy, and financial sectors were the top losers. Midcap and smallcap indices also registered losses ranging from 1 per cent to 2 per cent.
Market Outlook
Market analysts suggest that the Nifty index has been consolidating within its short-term moving averages (20 DEMA and 50 DEMA) in the 24,000-24,400 range. A decisive breakout from this zone will likely determine the next directional move. Key support is positioned between 23,450-23,700 in the event of further declines.
Experts recommend cautious trading and strong emphasis on overnight risk management due to mixed trends across sectors.
Investor Activity
Foreign Portfolio Investors (FPIs) turned net sellers in the Indian stock market, offloading equities worth Rs 12,404.73 crore during the week of August 5 to 9. However, domestic institutional investors remained net buyers, largely compensating for the outflows by foreign investors. The net gross purchase by domestic investors in August stands at Rs 23,500.01 crore.
Doubts Revealed
Volatility -: Volatility means that the prices in the stock market are going up and down a lot, making it unpredictable.
Global Concerns -: Global concerns refer to worries about things happening in other countries that can affect the Indian stock market, like economic problems in the US.
Domestic Indicators -: Domestic indicators are signs or data that show how well the Indian economy is doing, like how much stuff is being made or how much prices are going up.
IIP -: IIP stands for Index of Industrial Production. It measures how much factories and industries in India are producing.
CPI -: CPI stands for Consumer Price Index. It shows how much the prices of everyday things like food and clothes are increasing.
WPI -: WPI stands for Wholesale Price Index. It measures the price changes of goods sold in bulk, like to shops and businesses.
Earnings Season -: Earnings season is the time when companies announce how much money they made or lost in the last few months.
Nifty -: Nifty is a stock market index in India that shows the performance of 50 major companies listed on the National Stock Exchange.
Sensex -: Sensex is another stock market index in India that shows the performance of 30 major companies listed on the Bombay Stock Exchange.
Foreign Investors -: Foreign investors are people or companies from other countries who invest money in the Indian stock market.
Net Sellers -: Net sellers are investors who are selling more stocks than they are buying.
Domestic Investors -: Domestic investors are people or companies from India who invest money in the Indian stock market.
Net Buyers -: Net buyers are investors who are buying more stocks than they are selling.