Market Outlook: Nifty could trade between 11500 and 11700

The bulls party continued in the last week as Nifty gained for the fifth straight week, rising 86 points, or 0.75%, week on week, to a record high level of 11557 on a closing basis. Midcap index gained 0.51%.

The 50-share index touched to its life high level of 11620 and settled lower ahead of sell-off in bank, IT and auto sectors on the last trading day post key meeting between the US and China which went did not see any developments on trade tariff tension issue.

Among the sectors, except banks and onfra, all the sectors ended in the green. The Bank Nifty underperformed ending lower by 294 points, or 1.04%, led by profit booking in private sector banks. The energy sector gained the most 4.1%, in which Reliance and ONGC were the star performers. Infra sector too rose after a very long time, led by L&T post the announcement of first-ever share buyback worth Rs 9,000 crore. The Pharma sector advanced for the second week by 3.79% led by Lupin and Dr Reddy’s. The metal sector rose by 2.57% led by Vedanta and JSW Steel.

Both the foreign institutional investors (FII) and domestic institutional investors (DII) bought equities worth Rs 128 crore and Rs 1,838 crore. Crude oil price spiked to $75.5/bbl on the US sanctions on Iran. US President Donald Trump criticised Fed officials favouring gradual rate hikes in this calendar year to fuel US economic growth.

In the last week highlights, BG Asia Pacific sold its 10% stake in Mahanagar Gas and HT Global sold 8.4% stake in Hexaware. The pharma companies were in the limelight with positive news flows of various clearances by the US FDA. Reliance Industries topped the chart by clocking market capitalisation of Rs 8 lakh crore.

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In the key global events this week, the US preliminary Q2 (April-June) GDP data will be released on Wednesday. India’s April-July fiscal deficit data and Q1’19 GDP data will be released on Friday. August series F&O expiry is on Thursday.

Last week, Nifty traded in a very narrow range of 11620 and 11500 with a pause in the speed of ongoing momentum. This week, the outcome of the Jackson Hole meeting and F&O expiry will weigh on the market trend. One can expect volatility fearing the US tariff trade war and rupee around 70 levels can cause concern over fiscal deficit.

Technically on the weekly charts, Nifty has made a small positive candle with upper shadow signalling a choppy trend. For the week, Nifty supports are at 11530 and 11480 levels while resistance at 11635 and 11700 levels. The probable trading range could be 11500 to 11700 with a focus in IT, pharma, metals and PSU banks.

By, Yogesh Vinod Mehta
The writer is VP-retail research, Motilal Oswal Financial Services

Source: DNA Money