Week Ending August 1st 2025

Dear patrons, in an eventful week the markets were firmly in the grip of bears to end the week more than 1% down. Nifty fell for the 5th straight week, marking its longest weekly losing streak in 2025. Nifty Midcap, SmallCap, IT, Realty, PSU Bank, Energy and Auto indices also declined. FMCG emerged as the top gainer, while IT saw its steepest weekly fall of 2025. Monthly chart signals bearish engulfing.

India’s market cap to GDP ratio at 136.8% is near a 20-year high, signaling the market has outpaced economic growth. Valuations remain elevated while earnings have not caught up. On the IIP front though, the Indian industry growth shrunk to 1.5% from 4.9% YoY, showing a major slowdown in activity. The IMF (International Monetary Fund) though, remains bullish on the Indian economy. In its recent update the IMF raised India's growth projection by 20 bps for the current fiscal and by 10 bps for the next. India remains the "Fastest Growing" large economy in the world.

Globally, the US markets had a mixed week. The S&P and Nasdaq were again very bullish, making new lifetime highs on multiple occasions. On the last trading session of the week the US markets fell sharply on account of very weak jobs data. The weak data may prompt the FED to cut interest rates sooner than expected.

Domestically, major reason for fall in the markets remains FII selling. FIIs have been selling Indian stocks relentlessly, while domestic institutions remained consistent buyers to support the markets. Falling INR against the USD provides further impetus to FII selling. The INR fell sharply last week to within touching distance to its recent low levels. The MPC (Monetary Policy Committee) meet begins on Monday, and its results are expected on Wednesday. We do not expect much action from the RBI this time around. However, a surprise can't be ruled out as inflation is within the RBI's comfort level and there is a need to provide impetus to industrial growth.

Let us now take a look at the charts and try to figure out movement for the coming week.

Nifty closed a tad below its important support around 24600 on daily charts while just a tad above support on weekly charts. We do not expect big downward movement from these levels and expect a turnaround in Nifty. A close below 24400 however, may lead to further fall towards 24000-23900, while Nifty needs to close above 24800 for any meaningful up move to take place. A move above 25000 is needed for the first signs of getting out of the woods for the Nifty.

BankNifty has been weaker of the two benchmark indices. It has closed below its crucial support level of 56000 on couple of session marking distinct weakness. In coming days BankNifty should find support near 54900-55000 while 56500-56600 should act as stiff resistance.

Sectoral indices barring FMCG bored the brunt of sell off on Friday. Investors should look to accumulate good quality stocks in every dip. A well-diversified portfolio provides a cushion against erratic movements in the markets.

Traders are advised caution in the eventful week. Banking and NBFC stocks may see wild moves owing to MPC decision. Stay nimble footed and adhere to strict stop losses.

Stay Invested!!!

"In commodities, when prices go up, demand goes down. In stocks, when prices go up, demand goes up"~ Rakesh Jhunjhunwala

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.