Week Ahead

Indian equities along with global peers succumbed to selling pressure in the week ended August 20 as rising delta variant COVID-19 cases globally, and likely earlier than expected Fed tapering plans dented market sentiment. Barring FMCG and IT, all other sectoral indices are caught in a bear trap.

Overvaluation, especially after nearly 7 percent rally in August so far taking the benchmark indices to new highs last week also pulled the market down. The BSE Sensex was down 107.97 points at 55,329.32 and the Nifty50 fell 78.60 points to 16,450.50.

The outflow of foreign money also caused nervousness in the Indian equities in the week gone by, though domestic institutional investors remained supportive with net buying of Rs 1,696 crore in August including Rs 162 crore of buying in the current week.

FIIs have net sold Rs 4,314.4 crore worth of shares in the truncated week, taking the total net outflow to Rs 819 crore in August.

The coming week is expected to be volatile due to the monthly expiry of futures & options contracts and apart from that, also the market will keep a close watch on global cues (including world indices) and COVID-19 situation.

Technically Nifty50 fell 0.7 percent on August 20 but formed a bullish candle on the daily charts as the closing was higher than opening levels, while in the week, the index was down half a percent and formed a small bearish candle on the weekly scale. We expect the weakness to continue in coming sessions with 16,400 being the near term support.