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Below the Quote on Weekly Note by Mr. Ajit Mishra, SVP - Research, Religare Broking Ltd

Markets sustained their upward momentum for the third consecutive week, largely driven by favorable global cues. After a strong start, the benchmark indices moved within a narrow range during the initial sessions. However, a sharp rally on Thursday allowed the indices to resume their uptrend. The continued optimism in the US markets, along with China’s newly announced stimulus measures, further contributed to the positive sentiment. Consequently, the Nifty and Sensex posted gains of approximately 1.5% each, closing at 26,178.95 and 85,771.80, respectively.On the sectoral front, rate-sensitive sectors such as banking, financials, auto, and real estate were initially in the spotlight. Later in the week, metals and power also attracted attention. Despite this positive movement in key sectors, broader indices underperformed once again, ending flat to marginally lower.

Going ahead, global factors will play a pivotal role, especially with the absence of any major domestic events. US markets have been on a strong upward trajectory, with the Dow Jones Industrial Average (DJIA) nearing the upper boundary of its rising channel at 42,300. A decisive breakout from this level could fuel further gains, though there is a possibility of consolidation if it fails to break through. Similarly, the S&P 500 and Nasdaq Composite are also trending higher, indicating widespread participation across sectors.

Domestically, the upcoming week marks the beginning of a new month, which means participants will closely monitor key data releases. Auto sales data, set to be released from October 1, will be a key focus, along with important economic indicators such as current account data, HSBC India Manufacturing PMI, HSBC India Composite PMI, and HSBC India Services PMI. Additionally, trends in foreign fund flows and crude oil price movements will be closely watched, as they could influence market sentiment.

The ongoing global market strength, coupled with rotational buying across key sectors, is supporting continued market gains. The Nifty is now targeting 26,500, with the potential to reach 27,000, especially if IT stocks show momentum alongside other major sectors. In the event of a dip, the 25,700-25,900 zone is expected to provide support. Traders are advised to adopt a "buy on dips" strategy, focusing on sectors like energy, auto, healthcare, and real estate, while being selective in other areas. Additionally, caution is recommended when trading in the midcap and smallcap segments, as these broader indices have been underperforming.

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