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Below the Quote on Weekly Market Analysis by Mr. Ajit Mishra – SVP, Research, Religare Broking Ltd

Markets surged strongly, reclaiming record highs, largely supported by positive global cues. While the tone remained subdued for most of the week, a sharp rally on Thursday shifted momentum back in favor of the bulls. By the end of the week, both the Nifty and Sensex closed near their highs at 25,356.50 and 82,890.94, respectively. All sectors contributed to the rally, with FMCG, IT, and banking leading the gains. The broader indices also performed well, with the midcap index reaching a new record high.

Looking ahead, the coming week will be critical with the US Fed meeting scheduled, and its outcome expected on September 18. With a 25 bps rate cut already priced in, a significant market reaction is unlikely. The Fed’s guidance on inflation, growth, and future rate cuts will be key in shaping broader market sentiment, particularly regarding global liquidity and risk appetite. A 50 bps cut could spark a positive reaction, especially in emerging markets like India. However, this effect may be short-lived as it could also raise concerns about the underlying strength of the U.S. economy. Meanwhile, the US benchmark index, the Dow Jones Industrial Average (DJIA), along with broader indices, made a strong recovery in the past week, nearing record highs and signaling positive sentiment ahead of the Fed's decision.

Domestically, participants will be closely monitoring WPI inflation data and foreign fund flows, especially after recent improvements.

The prevailing market trend is expected to continue, and we are targeting 25,550 in the Nifty as the immediate goal. The recent participation from private banking majors is encouraging, and their sustained momentum could help the index reach the next milestone of 26,000. We recommend maintaining a "buy on dips" strategy, with strong support in the 24,750-25,000 range. Along with banking and financials, we advise focusing on IT, real estate, and metals for long trades, while being selective in other sectors. As the broader indices gain traction, it’s important to focus on fundamentally strong stocks in the midcap and smallcap segments, given the selective participation.

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