Below is the Views On weekly note by Mr. Ajit Mishra, VP Research, Religare Broking
Markets witnessed profit-taking last week and lost over two and a half percent, mainly pressurised by rising border tension between India and China and weak global cues. Besides, muted macroeconomic data viz. PMI data fell for the sixth month in a row and GDP data contracted by 23.9% further dented the sentiment. Amid all, the SC verdict on AGR dues and better than expected auto sales numbers eased some pressure in the middle. However, a sharp sell-off in the global markets again changes the market tone in the final trading session. Consequently, the benchmark indices, Sensex and Nifty, ended lower by 2.8% and 2.7%, respectively. The broader markets too fell in-line with the benchmark and ended in the range of 2.6-2.8%. Amongst the sector, barring telecom, which ended with gains of 1.5%, all the other sectoral indices witnessed selling pressure where Banks, PSU and Realty were the top losers and ended significantly lower by 5.4-6.3%.
In the absence of any major event, participants will continue to take cues from the global markets next week. They will also be keeping a close eye on the India-China border tussle and any news of escalation will further deteriorate the market sentiment. Besides, the next SC hearing on petitions seeking interest rate waiver for the moratorium period is scheduled on September 10 and that may induce volatility in the banking pack.
Markets are facing headwinds from both domestic and global front and indications are pointing towards further slide ahead. The next major support exists at 11,050 in Nifty and it would face stiff resistance around 11,600 levels in case of any rebound. Since the broader indices are trading largely in tandem with the benchmark, we may see further profit-taking in midcap and smallcap space as well. We thus advise traders to align their trades accordingly. Investors, on the other hand, should utilise this phase to accumulate quality stocks on dips.
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