Indian stock market: The Indian stock market closed the week on a cautious note, extending their ongoing correction amid concerns over global interest-rate trends, geopolitical developments and heightened volatility linked to the new Closing Auction Session.
While a strong rebound on Friday, driven by heavy buying in IT stocks following positive global technology cues, provided some relief, the benchmark indices remained in the red for the third straight week.
On a weekly basis, the Nifty slipped around 0.31% to end at 24,175.65, while the Sensex declined nearly 0.36% to settle at 77,264.51. The broader market, however, showed greater resilience, with the Midcap and Smallcap indices advancing around 0.52% and 0.51%, respectively.
Stock market outlook and trading strategy
According to Ponmudi R, CEO – Enrich Money, the coming weeks are likely to remain driven by global monetary-policy expectations, crude oil movements and developments surrounding the Strait of Hormuz.
Ponmudi noted that any sustained improvement in shipping flows could further reduce the geopolitical premium in crude oil and provide relief to emerging-market equities, while renewed disruptions could quickly reverse that trend. US monetary policy is now the dominant global catalyst following Fed Chair Kevin Warsh's hawkish remarks at Jackson Hole.
"Markets will look ahead to the August jobs report, due September 4, along with the next inflation reading, as key data points in determining whether the recently increased expectations of a September rate hike hold or ease.
On the domestic front, first-quarter GDP data will be another important factor for broader risk sentiment, offering greater clarity on the pace of domestic growth against a backdrop of elevated energy prices and an unresolved Middle East conflict that has disrupted global supply lines and contributed to higher commodity prices," he added.
Meanwhile, Ajit Mishra – SVP, Research, Religare Broking, recommended investors to maintain a selective approach and focus on companies with strong earnings visibility, healthy balance sheets, sustainable cash flows and resilient business outlooks.
“Amid current volatility, investors should avoid aggressively chasing prices and instead use meaningful declines to gradually accumulate fundamentally strong companies. Disciplined position sizing, prudent risk management and a stock-specific approach will remain important until greater clarity emerges regarding global monetary policy, crude oil prices and geopolitical developments,” Mishra said.
Top 5 triggers for the Indian stock market
1] US Fed chair Kevin Warsh's Jackson Hole speech
According to Mishra, the outcome could significantly influence expectations regarding the Federal Reserve's September policy decision, the US dollar, Treasury yields and emerging-market fund flows.
Federal Reserve Chairman Kevin Warsh on Friday voiced concerns over persistently high inflation, suggesting that interest rates may have to rise further if there is insufficient progress in bringing price pressures under control.
In closely watched comments at the Fed’s annual symposium in Jackson Hole, Wyoming, Warsh stopped short of offering clear forward guidance on the central bank’s future policy path. He also refrained from outlining the specific economic conditions that would trigger a change in interest rates.
2] India Q1 GDP data
The upcoming week is likely to be packed with key events, with domestic GDP figures and major global economic data expected to influence market sentiment. India’s Q1 FY27 GDP figures are due on August 31, with economists anticipating a slowdown in growth from the 7.8% recorded in the previous quarter.
3] US-Iran war
The US-Israel war with Iran entered its sixth month on Friday.
Markets remained focused on the uneven recovery in oil flows through the Strait of Hormuz, a key shipping route that accounted for around 20% of global oil production before the conflict began.
Washington has warned countries against maintaining business ties with Iran, threatening secondary sanctions. However, the U.S. Treasury Department has so far refrained from penalising major Iranian trading partners, including China and India, as such measures could have broader repercussions for the U.S. and global economies.
4] Crude oil prices
Oil prices ended lower on Friday and recorded weekly declines as traders assessed signals surrounding the US Federal Reserve’s approach to curbing inflation, along with reports of a potential agreement to facilitate shipping through the Strait of Hormuz.
Brent crude futures settled 39 cents, or 0.43%, lower at $89.31 a barrel, while West Texas Intermediate (WTI) crude futures declined 13 cents, or 0.16%, to finish at $83.40 a barrel.
For the week, Brent crude fell more than 5%, while WTI posted a decline of over 4%.
5] FII flows
Foreign Institutional Investors (FIIs)/Foreign Portfolio Investors (FPIs) remained net sellers for the second consecutive trading session on August 28, offloading Indian equities worth ?5,040 crore, according to the latest exchange data. In contrast, Domestic Institutional Investors (DIIs) continued their buying spree, emerging as net buyers with purchases worth ?5,184 crore.
DIIs bought shares worth ?16,539 crore during the session, while their selling stood at ?11,355 crore. Meanwhile, FIIs/FPIs purchased equities worth ?13,264 crore but sold shares amounting to ?18,303 crore.
Despite the latest outflows, FIIs/FPIs remained marginal net buyers in August so far, with investments of around ?455 crore. DIIs, on the other hand, have pumped nearly ?53,679 crore into Indian equities during the month.
Disclaimer: This story is for educational purposes only. Please consult with an investment advisor before making any investment decisions.