Bulls anticipate continued gain as markets remain optimistic

Markets remain optimistic, with indices near record highs as bulls anticipate continued gains. However, concerns loom over slower GDP growth and a dip in GST collections. India's GDP growth has hit its lowest in five quarters, and although GST revenues increased by 10%, net tax revenue, after refunds and input tax credits, fell by 7%.

Foreign investors played a significant role in boosting the market last week. This week, vehicle sales and manufacturing PMI will be key indicators of market direction.

In the derivatives market, Gfit Nifty closed at 25,374 on Friday night and rose to 25,410 Monday morning, signaling a likely positive opening for Indian markets.

European, US, Asian markets

European markets ended last Friday with solid gains, with most indices at record levels. A decrease in Eurozone inflation to 2.2% in August supported the rally.

U.S. markets also closed on a high note on Friday, with the Dow Jones setting a new record and the S&P 500 closing higher for the fourth consecutive month. The US Federal Reserve’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) index, rose just 2.5% in July, reinforcing expectations of a rate cut.

In August, the Dow gained 1.8%, the S&P 500 rose 2.3%, and the Nasdaq added 0.7%. These gains follow a recovery from sharp declines of 5.4% to 10.7% at the start of the month.

On Friday, the Dow Jones index rose by 228.03 points (0.55%) to close at a record 41,563.08. The S&P 500 gained 56.44 points (1.01%) to end at 5648.40, and the Nasdaq surged 197.19 points (1.13%) to close at 17,713.62.

U.S. futures are trading lower this morning, with the Dow down 0.03%, the S&P 500 down 0.08%, and the Nasdaq down 0.10%. The yield on U.S. 10-year Treasury notes has fallen to 3.909%.

Asian markets are showing mixed signals today, with Japan's Nikkei up by half a percent while Chinese and Hong Kong markets are down.

Indian markets

Indian markets started strong on Friday, with the Sensex opening at a record 82,637.03 before closing lower. The Nifty opened at 25,249.70, reached a record 25,268.35, and then closed lower. This marked the 12th consecutive session of gains for the Nifty.

On Friday, the Sensex rose 231.16 points (0.28%) to close at 82,365.77, while the Nifty gained 83.95 points (0.33%) to finish at 25,235.90. The Bank Nifty climbed 0.39% (198.25 points) to close at 51,351.00.

The Mid-cap Index rose 0.68% to 59,286.65, and the Small-cap Index climbed 0.48% to 19,307.10.

Foreign investors bought shares worth ₹5,318.14 crore in the cash market on Friday, while domestic funds and institutions sold shares worth ₹3,198.07 crore. Last week, foreign investors sold shares worth ₹19,139.76 crore, while domestic funds bought shares worth ₹20,871.10 crore.

The market closed with a bullish sentiment. If the Nifty breaches the 25,350 resistance, it could move towards the 25,500-25,700 range.

Today, the Nifty index has support at 25,210 and 24,190, with resistance expected at 25,260 and 25,300.

Gold and crude oil prices dip

Gold saw significant declines towards the weekend, driven by profit-taking. It closed at $2,504.00 per ounce on Friday and fell further to $2,498 on Monday morning. The easing of U.S. recession fears and a drop in the PCE index to 2.5% have reinforced expectations of a rate cut, triggering selling pressure from profit-takers. December futures prices for gold fell to $2,535 per ounce.

In Kerala, gold prices dropped by ₹80 per gram on Friday and Saturday, bringing the price per gram to ₹53,560. Silver prices also fell, closing at $28.83 per ounce.

The dollar index rose on Friday, closing at 101.70, and climbed further to 101.72 this morning. The rupee saw a slight gain on Friday, closing at ₹83.86 per dollar, down by one paisa.

Crude oil prices dipped again as supply constraints from Libya eased. Brent crude fell by 2.5% to close at $76.93 on Friday, and this morning, the price dropped further to $76.35. WTI crude is at $73.10, and UAE's Murban crude is at $76.50.

Cryptocurrencies continued to decline. Bitcoin fell from $59,200 over the weekend to $57,200 on Monday, and Ether dropped to $2,425. There is a significant withdrawal of funds from crypto assets.

Industrial metals showed mixed trends. Copper rose by 1.08% to $9,214.25 per tonne, while aluminum fell by 0.43% to $2,446.80 per tonne. Nickel, zinc, and lead saw gains, while tin declined.

Slowdown in GDP growth: no small concern

India's GDP growth for April-June slowed to 6.7%, down from 7.8% in January-March and 8.2% in the same quarter last year. The 1.5% drop from last year’s 8.2% growth rate is somewhat concerning.

The Reserve Bank of India had forecasted growth of 7.1% for the first quarter and 7.2% for the full fiscal year. While RBI Governor Shaktikanta Das remains confident in achieving this, the Chief Economic Advisor to the Government of India is less optimistic, now expecting growth between 6.5% and 7%.

The government attributes the slowdown to reduced capital expenditure due to election-related code of conduct rules and delayed decisions. However, this explanation may not be entirely convincing. Agricultural growth fell from 3.7% to 2%, driven by lower production. The slowdown in the services sector's growth from 10.7% to 7.2% is also not solely due to government spending cuts. The decline in financial, real estate, and professional services growth from 12.6% to 7.1% is also notable. A 7.6% decline in GDP from the January-March period to April-June also sends concerning signals.

Market indicators (Friday, August 30)

• Sensex 30: 82,365.77 (+0.28%)
• Nifty 50: 25,235.90 (+0.33%)
• Bank Nifty: 51,351.00 (+0.39%)
• Mid Cap 100: 59,286.65 (+0.68%)
• Small Cap 100: 19,307.10 (+0.48%)
• Dow Jones 30: 41,563.08 (+0.55%)
• S&P 500: 5648.40 (+1.01%)
• Nasdaq: 17,113.43 (+1.13%)
• Dollar ($): ₹83.86 (-₹0.01)
• Dollar Index: 101.70 (+0.36)
• Gold (ounce): $2,504.00 (-$17.90)
• Gold (gram): ₹53,560 (-₹160)
• Crude (Brent) Oil: $76.93 (-$02.99)