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Below is the Daily Market Commentary 03rd September 2021 by Mr. Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services

Indian markets ended the week on a record high as momentum continued in blue chip large caps. Sensex crossed the 58,000-level for the first time while Nifty made a new high of 17,340, led by gains in index heavyweights like Reliance Industries, ONCG, Coal India, Titan amidst positive trend in global markets and sustained foreign fund inflows. Both Nifty/Sensex closed at new record highs with gains of 89 /277 points (+0.5% each) at 17,323/58,130. Broader market too gained in-line with Nifty midcap 100/ Nifty smallcap 100 up ~0.5% each. On a sector basis today strength was seen in Oil&Gas, Metals, Media, Auto, Realty, PSU Banks and Pharma while mild weakness was witnessed in Private Banks and FMCG stocks. India VIX moved up by 2.12% from 14.24 to 14.54 levels.

Reliance Industries led from the front as the top gainer today gaining 4.1% to close at record levels of Rs2390. L&T Technology gained over 7% after the company spelt out its aspiration of achieving FY25 revenue of USD1.5b, along with 18% EBIT margin in an analyst meet yesterday.  Earlier during the day, HDFC Life Insurance announced the 100% acquisition of Exide Life for Rs6687 crore through a mix of cash consideration and share issue.

Liquidity in the domestic market has been strong  for the past couple of days with FIIs putting in over Rs6000 crore in last 4 sessions itself. Further, Strong Service PMI data and healthy GST collection numbers boosted market sentiments. India’s Service PMI stood at 56.7 in August, up from 45.4 in July indicating the fastest growth in over 18 months while the GST collection remained above Rs1 lakh mark for the second consecutive month at Rs 1.12 lakh crore for August. Globally cues were positive with US markets closing at record levels while European stocks remained range-bound near all-time highs. Asian markets too gained during the day. Initial jobless claims in US declined to 340,000 for the week ending Aug 28, from 354,000 the prior week indicating healthy employment trends.  

Going ahead, market is likely to continue with its positive momentum as economic recovery and vaccination continues their northward journey. Technically, Nifty formed a Bullish candle on daily and weekly scale which indicates a complete dominance by bulls to drive the next momentum. It gave a breakout on weekly frame at the beginning of the week and continues to form higher highs from the last five weeks. Now we expect Nifty to extend its move towards 17500 - 17700  zones while on the downside support is seen at 17200 -17050 levels. Strong liquidity and positive global cues are lively to support domestic markets to continue their movements to record levels. However valuations are also moving beyond comfort zones and hence could lead to bouts of profit booking and increase in volatility. Large caps offer better margin of safety in the current environment and could continue to remain in focus in the near term as well.

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