D-Street weekly market wrap: Indices snap 8-week winning run; consolidation likely going ahead

Indian equity benchmarks after falling sharply in Friday's session (August 2) snapped D-Street's 8-week winning run. The Nifty and Sensex indices for the week ended August 2 ended 0.47 per cent and 0.43 per cent lower, respectively. This is after a non-stop bull run spanning five days that led Nifty to breach psychological crucial levels of 25,000.

Nifty ended the week down 1.17 per cent or 293.2 points at 24,717.7 levels, while the Sensex was dragged lower by 1.08 per cent or 885.59 at 80,981.95 levels.

The losses in today's session were largely led by weak global cues.Prashanth Tapse, Senior VP (Research), Mehta Equities remarked that the recent upsurge had made Indian stocks very expensive and hence correction was due for some time. Despite the slump, our resilient economy and strong fundamentals along with healthy corporate earnings would keep the downside limited.

Technically speaking, the 25000 mark for Nifty has now become a psychological hurdle and confirmation of strength can be seen only above that level, he added.

Broader markets on a weekly basis emerged mixed as Nifty Midcap 100 added 0.25 per cent during the review week, while the Nifty Smallcap 100 toppled 0.3 per cent. Bank Nifty, meanwhile, also gained 0.11 per cent during the week.

The Indian market is showing signs of fatigue at higher levels, as most positive factors have already been priced in. Subdued Q1FY25 earnings and stretched valuations are not reassuring investors, noted Vinod Nair, Head of Research, Geojit Financial Services.

Sector-wise, metals have been affected by weak results and higher imports harming domestic industries. Capital goods and real estate have been impacted by profit-booking, while the auto sector has suffered due to below-expected monthly sales figures.

Top sectoral gainers or losers

Sectorally Nifty Realty was the top loser this week losing over 3.7 per cent, followed by Nifty IT that also registered a cut of over 3 per cent. Conversely Nifty Energy topped with gains of over 2.5 per cent, followed by Nifty Pharma registering gains of 1.4 per cent.

Outlook for the week ahead

Nair noted that going forward, the chances of further consolidation seem elevated due to premium valuations, weak Q1 results, and ongoing global market consolidation. The RBI policy meeting next week could provide some hints towards an outlook on rates, while expectations are to maintain the status quo as of now.