Indian Stocks End Higher for the Week on Positive Data, Strong Domestic Demand
The Indian equity market ended higher for the week, with the Nifty50 and the Sensex gaining 1.97% and 1.85%, respectively. The gains were supported by positive data points on a weekly basis, including strong GDP and PMI figures, as well as sustained buying by domestic institutions.
The broader indices also outperformed, with the BSE Mid-cap index rising 4% and the BSE Small-cap index gaining 2.2%.
Positive Data Points
The positive data points that supported the market’s gains included:
- A strong GDP growth of 8.2% in the second quarter of 2022-23, beating expectations.
- A PMI reading of 54.0 in August, indicating that the manufacturing sector continued to expand.
- Sustained buying by domestic institutions, who bought equities worth Rs 4,572.14 crore in the week.
Outlook for the Market
Looking ahead, analysts say the market is likely to consolidate in the near term, but with the potential for further gains in the medium term.
Technical Analysis
Jatin Gedia, Technical Research Analyst at Sharekhan by BNP Paribas, said that on the hourly chart Nifty has reached the upper end of the rising channel and hence a consolidation is likely in the upcoming week. The range of consolidation is likely to be 19850 – 19670. Daily and hourly momentum indicators have a positive crossover which is a buy signal and thus this is likely to be only a consolidation and in case of a dip it should be used as a buying opportunity.
On the upside we expect 19900 which is around the swing high it touched during July. In terms of levels, 19630 – 19670 shall act as a crucial support zone while 19860 – 19900 shall act as an immediate hurdle zone.
Amol Athawale, Vice President – Technical Research, Kotak Securities, said that after a promising reversal formation the Nifty has been holding a higher bottom formation and is comfortably trading above 50 and 20-day SMA (Simple Moving Average) which is largely positive. It has also formed a long bullish candle on weekly charts, which supports further uptrend from the current levels.
For the trend following traders, 19700-19650 would be the key support levels and above the same it could rally till 19900. Further upside may lift the market till 20000. On the flip side, below 19650, the uptrend would be vulnerable and could see a short-term correction till the 50-day SMA or 19550-19500 levels.
Overall Outlook
Overall, the outlook for the Indian stock market remains positive, with the potential for further gains in the medium term. However, investors should keep an eye on global developments and any signs of a slowdown in domestic demand.
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