Week Ahead...

The BSE Sensex plunged 1,276 points, or 1.6 percent, to 79,706, and the Nifty 50 was down 350 points, or 1.4 percent, at 24,368 during the week ending August 9. The Nifty Midcap 100 and Smallcap 100 indices declined 1.3 and 2.1 percent, respectively. All sectoral indices, barring pharma, closed in the red.

Market sentiment was dented due to profit booking because of disappointing US economic data (that signalled recession fears), unwinding of the yen carry trade, and the hawkish tone of the Reserve Bank of India (RBI) in the recent policy meeting.

On Monday August 12, the market might react to the Hindenburg Research report alleging that SEBI Chairperson Madhabi and husband Dhaval Buch were involved in Adani Group's offshore funds. The Buch family has denied all charges, asserting that they had no hidden stake in the funds mentioned in the report, while the Adani Group has rebuffed the latest allegations from Hindenburg Research, asserting that their overseas holding structure is fully transparent.

Apart from this, with the fall in volatility, the coming truncated week is expected to be consolidative as the markets may try to get back in the black with a focus on the inflation numbers from India and the US, and align with trends in global exchanges.

Moving forward, the direction of the domestic market will be influenced by global markets. A lack of fresh triggers and subdued earnings will be a deterrent for higher valuation, and investors are advised to shift their focus from growth stocks to value stocks.

Technically Nifty 50 formed a bullish hammer sort of candlestick pattern (not a classical one) on the weekly charts with above average volumes as there was buying interest at lower levels, and defended its 10-week EMA (24,117). But the momentum indicator RSI (Relative Strength Index) displayed negative bias on the weekly and monthly charts. Hence, the index is likely to consolidate with the immediate hurdle at 24,400, followed by 24,700 (the upper end of the bearish gap of August 5) on the higher side, but on the downside, 24,100-24,000 is expected to be immediate support area, followed by 23,900, the low of last week.

The weekly options data indicates that 24,000 is likely to be act as a support, while 24,400 is the immediate hurdle, followed by 25,000 on the higher side.