 |
|
The Indian stock market experienced a significant rebound on Friday, mirroring the positive performance of global markets. This upswing was fueled by robust economic indicators in the US, particularly strong retail growth figures, and the anticipation of a potential interest rate cut in September. The S&P 500 and Nasdaq, the major US stock indices, recorded their seventh consecutive week of gains, registering the largest weekly percentage increases since October 2023. Retail stocks spearheaded this rally following an 18-month high in retail sales. The European markets also witnessed a positive surge, with the Stoxx 600 index gaining 2.46 percent, driven by the expectation of further interest rate cuts in September. Germany's DAX rose by 3.38 percent, France's CAC 40 by 2.48 percent, Italy's FTSE MIB by 4.09 percent, and the UK's FTSE 100 Index by 1.75 percent.
This global market exuberance translated into a sharp rally in the Indian market on Friday, highlighting its dependence on global trends for short-term direction. Examining the technical indicators, the Nifty index closed the week in positive territory, reclaiming the 20-day moving average at 24,490. This suggests a potential for further recovery in the coming days, especially as short-term sentiment indicators have reached oversold levels. The Nifty's movement beyond 24,630 could pave the way for a potential rise towards 25,700. The number of stocks within the Nifty 50 showing MACD buy signals has decreased to its lowest level since October 2023, with only 6 percent exhibiting buy signals, while the remaining 94 percent are on sell signals. This contrarian pattern, where the majority of stocks are signaling bearish sentiment, often signals a potential bullish turnaround, as evidenced by the strong move on Friday.
In terms of sector performance, the IT sector continues to display relative strength and momentum, contributing significantly to this week's gains. Other leading sectors include FMCG and Pharma, while momentum is also picking up in the Oil & Gas and PSE indices. The daily Relative Rotation Graph (RRG) from India Charts shows that Nifty IT and FMCG have experienced an uptick in relative momentum but remain in the weakening quadrant. Nifty Pharma and Consumer Durables maintain their position in the leading quadrant. Financial stocks are steadily improving in both relative strength and momentum, currently in the improving quadrant. On the other hand, Nifty Auto and Infrastructure have lost relative strength and momentum, placing them in a lagging quadrant. Nifty Energy, PSE, CPSE, and media have lost momentum, with most of these sectors now entering the weakening quadrant.
Source: Moneycontrol Pro Market Outlook | Oversold indicators suggest further rally