Nifty50, Sensex end flat on Friday as investors use caution

The Nifty 50 and the Sensex ended flat on Friday, August 23. The Sensex closed 33 points, or 0.04 percent, up at 81,086. 21, while the Nifty 50 ended 12 points, or 0.05 percent, up at 24,823.15.

The markets ended flat even as major Asian and European peers were largely positive and the dollar hovered near one-year lows. Investors are now focused on the US Fed Chair's Jacksons's Hole speech, seeking clues on upcoming US rate cuts.

"Ahead of Fed Chair Powell’s speech, the Indian indices oscillated around the flat trajectory, and mixed global market sentiments further catalysed this scenario. Meanwhile, investors are exercising caution and awaiting Mr Powell’s signals for more insights on the interest rate path," Vinod Nair of Geojit Financial Services, observed.

No fresh triggers

The domestic market lacks fresh triggers. While a 25 bps Fed rate cut in September is fairly discounted, the market's premium valuations and unimpressive Q1 earnings of India Inc. seem to have capped the upside.

The Nifty 50 has closed in the green for seven consecutive sessions, though five of those sessions saw gains of less than 0.5 percent. The index has managed an overall gain of 2.8 percent during this period.

Strong retail participation has kept the Indian stock market up even as foreign portfolio investors have been selling Indian equities this month.  According to NSDL data, foreign investors have sold Indian equities worth ₹16,305 crore this month till August 22.

"While many positives, such as robust domestic macro, sustained earnings growth, and political stability, have already been factored into current Indian market valuations, strong retail participation in Indian markets—directly and via mutual funds—with SIP figures crossing 20,000 crore continues to act as a positive trigger for our markets," says Jyoti Vaswani of Canara HSBC Life Insurance.

Nifty Midcap declines

On Friday, the Nifty Midcap 150 index fell half a percent, while the Smallcap 250 index ended 0.12 percent up. Nifty Auto jumped 1.12 percent among the sectoral indices, ending as a solitary sectoral gainer. Nifty Realty plunged 2.43 percent to end as the top loser among sectoral indices, followed by the Media and IT indices, each falling 1 percent.

Shares of Bajaj Auto (up 4.74 percent), Coal India (up 1.70 percent), and Bharti Airtel (up 1.59 percent) closed as the top gainers in the Nifty 50 index. The shares of LTIMindtree (down 1.27 percent), Wipro (down 1.16 percent), and ONGC (down 1.01 percent) closed as the top loser in the index.

According to Jatin Gedia, a technical research analyst at Sharekhan by BNP Paribas, the Nifty's up move appears slightly overstretched. It has risen higher without any meaningful pullback towards the hourly moving averages.

"The hourly momentum indicator has a negative crossover and divergence. Thus, it can be an intraday dip, so caution on longs is advised. The Nifty is also trading close to the 78.6 percent retracement mark of 24,830, which shall restrict further upside. Thus, the overall trend remains sideways, and the consolidation range is 24,200 – 25,000," said Gedia.

                                                     (By arrangement with livemint.com)