Home >Markets >Stock Markets >Another high for Nifty, but all eyes now on Bank Nifty

Markets have seen a stellar run since the past few weeks with both global and Indian bourses scaling record heights. This week was no different with Indian Indices continuing their onward march with no sign of wariness. While several factors contributed to this rally, it appeared that the existing liquidity in the market was the driving force. So far this year, funds raised through IPOs have increased by almost 2.2 times compared to the previous year and 11 more companies with SEBI’s nod are slated to raise over Rs. 11,600 crore. 

Another 40+ companies will be seeking nearly Rs. 89,000 crores as they await the regulator’s approval to join the bandwagon and cash in on the abundant liquidity and enthusiasm among retail investors. Another aspect contributing to this inflow is the regulatory storm that Chinese enterprises are facing, which is prompting investors to look at other growing economies. All these factors collectively led Nifty50 to record its fastest sprint of 1000 points in just 19 trading sessions.

Not only the markets but other macros also showed signs of recovery with the Q1GDP numbers rising in terms of personal consumption, exports and capex albeit on a low base, GST collections surpassing Rs. 1 lakh crore for the second consecutive month and manufacturing PMI data staying in expansionary territory from July. 

This certainly is strengthening the confidence of market participants which will fuel the rally going ahead. Going with the flow (with caution) seems to be the most logical choice of action in a market like this as Peter Lynch said: “People who exit the stock market to avoid a decline are odds-on favourites to miss the next rally."

Event of the week

August auto sales numbers didn’t surprise D-Street this week. Though numbers appear to be excellent on a YoY basis, on a sequential basis, passenger vehicles and tractors experienced minor headwinds while commercial vehicles performed well. Two-wheeler sales witnessed a slight slowdown due to concerns about affordability and increased competition from the EVs. What encumbered the automotive industry the most were supply-side curbs, especially the semi-conductor shortage which has further aggravated due to fresh lockdowns in East Asia. Nonetheless, the consumer demand is intact on account of the upcoming festive season and investors may strategically choose to build an exposure to benefit once these supply-side disruptions begin to fade out.

Technical Outlook

Nifty 50 index posted a big bullish candle on a weekly time frame and broader indices too participated in this rally. The Bank Nifty index is also trading near previous all-time high levels, which may act as a make-or-break situation as its bullish movement in the benchmark index can take Nifty up even higher. But traders should take note that current levels are overbought and mild dips would be smarter entries. The price zone around 16600 may act as an immediate support on declines.

Expectations for the week

Domestically, economic data such as manufacturing output and industrial production could drive investor sentiment next week. In absence of any other major event, Indian indices are expected to mirror global cues and move in tandem with foreign bourses. With a largely positive outlook, profit-booking may be seen in stocks running ahead of their fundamentals. Investors are advised to ride this bull rally with fundamentally resilient stocks. Nifty50 closed the week at 17323.6, up by 3.70%.

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