Week Ending August 30th 2024

Dear patrons, the week gone by belonged entirely to the bulls. Benchmark indices ended the week on a lifetime high for Nifty and Sensex. Nifty gained close to 2% over the week and erased all the losses of the first half of the month. We had already stated about Nifty making new lifetime high in the last week of August (You may read it here Weekly Market Update: Week Ending August 23rd 2024 (amitbajare.blogspot.com)).

News flow over the last week was pretty slow amidst exuberance over the much expected rate cut by the US Federal Reserve. As they say "No news is good news" and it was very evident in the markets. Global markets were very buoyant last week with crude oil prices easing below $ 80 / barrel. Falling crude oil prices along with falling interest rates should infuse a big chunk of liquidity in the system and in turn in the markets.

Domestic GDP numbers were out last week. India's GDP grew by 6.7% against expectation of 6.9%. Fall in GDP has been attributed to fall in Government spending due to elections and model code of conduct. Rating agency Moody's has increased its projected growth of India's GDP to 7.2% for CY 2024. Falling crude oil prices should drive growth in India's GDP as oil accounts for the largest bill to the exchequer. Monsoon has been satisfactory in August and has exceeded its quota in many parts of the country. Agricultural growth seems to be on track with a bumper crop season. GST collection for August rose by 10% to 1.75 lakh crores, testimony to the rising economic activity including consumer spending in India.

Let's now have a look at the charts and try to figure out what lies in store for the coming week.

Nifty moved slowly but steadily towards new lifetime highs as predicted in the last blog. As per the charts Nifty should find support in 25000-24900 range whereas resistance lies around 25500-25600 range. India Vix is comfortably placed for some more upside in the markets. RSI also suggests up move to continue for some more time.

A word of caution for traders. Nifty has closed in the green for consecutive 12 days. All good things come to end, so should this streak of positive closes on Nifty. We may witness a sharp and swift correction any time. Traders should be mindful of this and adhere to strict stop losses and book profits regularly.

Coming to BankNifty, after a subdued last week, it looks a bit fatigued with support around 51000-50900. Close below 50900 may trigger selling and BankNifty may towards 50000-50100 range, which should act as a strong support. On the other hand a close above 51500 may propel BankNifty towards 52400-52500 range.

Markets are "Buy-On-Dips", with every fall, big or small being bought into swiftly. Investors should look to accumulate good quality stocks in every dip.

“Value stocks are about as exciting as watching grass grow, but have you ever noticed just how much your grass grows in a week?”- Christopher Browne

P.S.: This communication is for educational purpose only and does not recommend buying or selling any stock or index. Trade at your own risk.