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Market Overview

After a pause in the previous month, the Indian markets resumed its uptrend for the month of August. There was strong buying interest in IT heavyweights and Reliance Industries which helped the Nifty to inch past 17,000 for the first time. The global cues too remained supportive for the month but Indian markets outperformed peers as receding cases and ramp up in vaccination aided sentiments. Lastly, the positive commentary from US Fed in the Jackson Hole Symposium lifted sentiments for the emerging markets like India. Both Nifty and Sensex registered strong gains of 8.7% and 9.4% respectively.

Market Outlook

Considering the markets are trading at record highs, we would advise some cautiousness at current levels. Globally, high frequency growth and inflation indicators would be actively tracked as investors look to gauge Fed’s actions going forward with respect to tapering. On the domestic front, with earnings season behind us, the investors would focus on macros and demand indicators. The progress of monsoon and the upcoming festive season would be eyed. We would advise investors to remain selective in the large cap, mid & smallcap space and look for companies with healthy growth prospects and trading at decent valuations.

Outlook for Nifty 50 (17377.80) 

Support 17,200/17,000/ 16,800  Resistance 17,550/17,800/18,000

* Nifty resumed trend after 2-month of consolidation and made a new milestone above 17,000 in August month. Upbeat global markets combined with supportive local cues helped the index to maintain the momentum till the end. Consequently, it settled at 17132.20; up by 8.69% levels.

* A mixed trend was witnessed on the sectoral front wherein IT, financials and FMCG outperformed the benchmark while metal, pharma, media and auto witnessed profit taking and ended lower.

* After the phenomenal move, Nifty may see some consolidation or profit taking in September month. Technically, it may face strong resistance at the 17,500 zone. Considering the trend, we advise focusing on a stock-specific trading approach and preferring sectors that are trading in sync with the benchmark for long trades.

Outlook for Bank Nifty (36592.35)

Support 36,000/35,550/34,800  Resistance 37,000/37,300/37,800

* BankNifty also witnessed traction in line with other sectors but underperformed the benchmark as it gained over 5% in the passing month. It finally settled at 36424.60.

* With the banking space, private banking majors contributed to the recovery while the PSU pack continue to struggle and ended with deep cuts.

* Technically, the banking index is trading in a channel and currently hovering around the upper band of the same. We believe sustainability above 37,000 would trigger fresh momentum else the move would be gradual. We reiterate our preference for private banking majors like ICICI Bank, Axis Bank, HDFC Bank to accumulate on dips.

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