Week Ahead...

The benchmark indices as well as broader markets continued its recovery for another week ended August 23, following positive global sentiments, including better-than-expected US economic numbers and increasing expectations for a September rate cut from the US Federal Reserve, and stable oil prices.

The BSE Sensex gained 0.81 percent and the Nifty 50 rallied 1.15 percent, while the Nifty Midcap 100 index was up 1.6 percent and Nifty Smallcap 100 jumped 3.5 percent during the week gone by.

The week ahead is expected to be positive with intermittent consolidation for the market, with focus on the June quarter GDP numbers from the India and US, Reliance Industries AGM and global peers' trend.

The selling pressure from the foreign institutional investors in the Indian equity cash segment continued for another week but slowed down considerably compared to previous weeks, may be after the increasing signals for a fed funds rate cut in September. Further slow down in selling activity or resuming buying interest at FII desk if any will be keenly watched by the market participants as if that happens, then the equity markets may get further boost in coming weeks.

FIIs have net sold Rs 1,609 crore worth shares in the week gone by, taking the total monthly outflow to Rs 30,586 crore in August, but domestic institutional investors, who have been providing a solid support to the market on every dip, continued pumping in major funds and in fact, compensating FII outflow on a major scale. DIIs bought Rs 13,020 crore worth shares for the week, and Rs 47,080 crore for the month.

Technically, the Nifty 50 has formed bullish candlestick pattern on the weekly charts with continuation of higher highs-higher lows formation for another week, while the index sustained above 10-week EMA for 15th consecutive week, which is a positive sign. Given the positive sentiment, we expect the index to march towards psychological 25,000 mark in the coming week as long as it defends 24,800 on closing basis and above 25,000, 25,100-25,200 is the zone to watch out for, while the sacrosanct support lies at 24,500.

The monthly options data indicates that the 24,900-25,000 is the likely hurdle on the higher side for the Nifty 50 next week, while the immediate support at 24,500, with 24,000 being the crucial support.