Indian markets extended the decline for the third week in a row and both indices registered the longest losing streak in five months. Elevated crude prices, uncertainty over U.S. interest rates and expiry-related movements kept investors cautious.
Meanwhile, the new closing-auction mechanism contributed to sharp price changes around the monthly derivatives expiry. Weakness in Reliance Industries, HDFC Bank and Bharti Airtel also weighed on the benchmarks. As a result, the NIFTY50 declined 0.3% to 24,175, while the Sensex slipped 0.4%to 77,264.
The broader markets, however, performed better than the headline indices. The Nifty Midcap 150 index and Smallcap 250 index gained around 0.4 % each during the week, indicating continued interest in stocks outside the large-cap space. This relative outperformance also showed that selling pressure was concentrated in select benchmark heavyweights rather than spread across the entire market.
Sectoral performance remained mixed, with 10 of the 16 major sector indices ending lower. IT was the clear outperformer, with the index gaining 2.4% after Nvidia’s strong results improved sentiment towards global technology stocks. Metals (+2.6%) and Pharma (+2.4%) stocks also showed relative strength. On the other hand, FMCG (-1.5%), Oil and Gas (-1.0%), Automobiles (-0.9%) remained under pressure.
️Spotlight: Information technology stocks outperformed during the week, with the NIFTY IT index gaining 2.4%. The rally was part of a broader recovery in global software and IT-services stocks along with Nvidia’s results. Salesforce provided the main trigger for the global services rally. The company raised its annual revenue and profit forecasts after quarterly revenue increased 11%.
This global rotation supported Indian IT companies. Additionally, a weaker rupee and attractive valuations following the sector’s earlier correction also encouraged value buying. Coforge led the gains along with LTIMindtree, rising 6% and 4% for the week, while TCS and Infosys advanced around 2% each.
️Key events in focus: The week ahead will be guided by three major events. India’s April-June GDP data on Monday, August 31, will provide fresh signals on domestic growth, with attention on consumption, government spending and private investment. The MSCI index rebalancing on the same day could trigger foreign fund flows and sharp stock-specific movements during the closing session. Additionally, August automobile sales data, beginning Tuesday, September 1, will offer an early indication of consumer demand, rural recovery and inventory ahead of the festive season.
Globally, the main event will be the U.S. jobs report on Friday, September 4. The non-farm payrolls, unemployment rate and wage-growth data could influence expectations for Federal Reserve policy and drive movements in the dollar, U.S. bond yields and global equity markets.
️Crude oil: Brent crude settled at $89.31 per barrel and WTI at $83.40 per barrel on Friday. Brent lost more than 5% during the week, while WTI declined over 4%. Prices eased on reports of possible progress towards restoring traffic through the Strait of Hormuz . However, flows through the strait remained irregular, keeping a geopolitical risk premium in prices.
For India, the weekly fall in crude provides some relief for the import bill, rupee and inflation outlook. Sustained prices near or above $90 would remain a concern for fuel costs and the margins of aviation, paints, tyres and other crude-dependent industries.
Market breadth
Market breadth weakened further during the week, with only 46% of NIFTY50 stocks trading above their 50-day moving average, down from 50% in the previous week. The reading has now slipped below the neutral 50 % level, indicating that weakness is gradually spreading beyond a few index heavyweights. However, breadth is not yet in the washed-out zone. A recovery above 50% would indicate improving participation, while a sustained decline towards 30 % would point to broader selling pressure.
Foreign investors positioning
Foreign institutional investors remained cautious during August and were marginal net buyers in the cash market for ₹454 crore. The limited foreign participation came amid elevated crude-oil prices and pressure on the rupee.
Domestic institutional investors continued to provide strong support, purchasing shares worth more than ₹50,000 crore during the month. Their sustained buying helped absorb foreign selling and supported the broader market despite three consecutive weekly declines in the benchmark indices.
NIFTY50 outlook
The NIFTY50 closed below its 20-day exponential moving average (EMA) and marginally below the 50-day EMA. The index continues to form lower highs after its early-August peak, keeping the short-term structure weak. However, the ADX reading of 15 suggests that the decline has not yet developed into a strong directional trend.
On the upside, the index must first reclaim the 24,260 zone. A decisive close above 24,360 could improve momentum and open the way towards 24,600. On the downside, 24,025 remains the crucial support. As long as this level holds, the index may continue consolidating between 24,025 and 24,360. A decisive close below 24,025 could strengthen the bearish setup and extend the decline towards 23,800.
