Sensex, Nifty this week: From bank loan growth to global manufacturing data, factors that may drive Dalal Street

The Indian equity markets concluded the last week with a cut of over half a percent amid weak microeconomic data. While retail inflation spiked to a 15-month high of 7.44 per cent in July, much higher than 4.87 per cent in June, the Index of industrial production (IIP) slipped to a three-month low of 3.7 per cent in June from 5.2 per cent in May. This week, traders will be eyeing macro data such as India’s foreign exchange reserves, bank deposit and loan growth, and global manufacturing data.

Economic events: On the economic front, investors will be eyeing India’s forex reserves data, scheduled to be released on August 25. The foreign reserves in India decreased to $601.450 billion in the first week of August 2023. On the same date, bank deposit and loan growth are also scheduled to be released. The value of deposits in India increased 12.9 per cent year-on-year in the fortnight ending July 28, 2023. The value of loans in India increased 19.70 per cent year-on-year in the fortnight ending July 28, 2023.

US market data: On the global front, investors would be eyeing a few economic data from world’s largest economy, the United States (US), starting with Redbook, Existing Home Sales on August 22, followed by S&P Global Manufacturing PMI, S&P Global Services PMI, S&P Global Composite PMI, New Home Sales, on August 23, Durable Goods Orders, Initial Jobless Claims, on August 24, Baker Hughes Oil Rig Count on August 25.

Global Market Performance: Last week, major equity Indices around the globe experienced increased selling pressure. In the US, the Dow Jones index declined 2.2 per cent, while the tech-heavy Nasdaq index tanked 2.6 per cent during the week that ended on August 18.

While in Europe, on a weekly basis, the German equity index DAX was down 1.6 per cent, the French CAC 40 index slipped 2.4 per cent and the British stock benchmark FTSE100 plunged 3.5 per cent. In Asia, the Japanese index Nikkei 225 dropped 3.1 per cent while the Chinese stock market Shanghai Composite Index declined 1.8 per cent.

Technical Outlook: Nagaraj Shetti, Technical Research Analyst, HDFC Securities, said after showing a range-bound action in the last few sessions, Nifty continued with volatility with weak bias on Friday and closed the day lower by 55 points. “A small body candle was formed on the daily chart with a long upper shadow. Technically, this pattern indicates a lack of strength in the market to sustain the upside bounce,” he said.

Shetti further said that negative chart patterns like lower highs and lows are intact and the Nifty is currently on the way down to form a new lower low. “We observe a broader triangle-type pattern on the daily chart and the market is currently placed at the edge of breaking below the lower support of 19250 levels.”

“The short-term trend of Nifty continues to be weak with range-bound action. There is a possibility of downside breakout of the immediate support of 19250 levels and the Nifty could slide down to another base area of 19100-19000 levels in the near term. Any upside bounce could find resistance around 19400 levels.” Shetti said.

Bank Nifty: Kunal Shah, Senior Technical & Derivative analyst at LKP Securities, said that the Bank Nifty index is persistently encountering resistance at the 44,000 level, where the call side holds the highest open interest. “The lower end of the support is noticeable around 43600, which aligns with the presence of the 100-day moving average (DMA). If this support level is breached, it could trigger additional selling pressure in the market. A break on either side will lead to trending moves,” Shah said.

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