Momentum hinges on geopolitical and macroeconomic developments

Weighed down by renewed FII selling, persistent geopolitical tensions, elevated crude oil prices, “unusual” strength in the mid- and small-cap segments and rising US bond yields; benchmark indices ended lower for the third consecutive week marking the longest losing streak in five months.

For the week, the Sensex declined 276.32 points, or 0.35 per cent, to 77,264.51, while the Nifty fell 76.35 points, or 0.21 per cent, to 24,175.65. Mild exuberance in the broader market has propelled the Nifty Midcap 100 and the Nifty Smallcap 100 indices 0.5 per cent higher.

FIIs remained net sellers for the second consecutive week, offloading equities worth Rs 20,260 crore during the week. Meanwhile, DIIs continued to provide support to the market, investing Rs 19,309.93 crore in equities over the week. The rupee snapped its two-week losing streak, gaining 32 paise against the US dollar to close at Rs 95.38.

During the week, the domestic currency traded in a range of Rs 95.32–95.75, amid volatility in global markets and currency movements. On a month-to-date basis, FIIs remained marginal net buyers at around Rs 454 crore, while DIIs recorded inflows of approximately Rs 79,620 crore.

The continued strength in domestic institutional participation remained an important stabilising factor, helping limit the impact of foreign selling. Gold and Silver snapped three-week winning streaks on profit-booking, with domestic prices dropping sharply on import duty cut rumours.

Gold and silver can trade in a range of 155000-165000 and 230000-260000 respectively. Investors would do well to track first-quarter GDP data and inflation numbers. Observers predict GDP to have grown by a median 7.3 per cent in the April-June quarter, with resilient consumption and exports, along with robust government capital expenditure, supporting growth despite supply chain disruptions and elevated commodity prices.

Inflation outlook will hinge critically on rainfall in September, with a further shortfall in the final month of the southwest monsoon potentially pushing FY27 consumer price inflation to 5.5 per cent or higher if El Nino conditions are confirmed.

Crude oil prices will remain a key market driver this week, with developments around the Strait of Hormuz likely to influence the geopolitical risk premium. Oil prices fell more than 5 per cent last week, as traders weighed stalled US-Iran diplomatic talks against the resumption of some crude flows through the Strait. 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.

The recent decline in crude prices, along with a firmer rupee and softer US yields, had helped cushion Indian equities against geopolitical concerns. Following US Fed Chairman Kevin Warsh’s speech at the Jackson Hole Symposium, the probability of a rate hike now has gone up significantly. The shift in expectations extends beyond the September meeting.

The US central bank will “have work to do” if policymakers do not gain the confidence needed to see inflation heading back to 2 per cent. Warsh’s remarks came closer than before to acknowledging that interest rate hikes may be needed to ease price pressures. However, observers continue to expect the Federal Reserve to keep interest rates unchanged in September, despite the more hawkish tone on monetary policy. Near term direction of the market will be dictated by the macroeconomic data, global market cues, international crude oil prices and FII flows.

IPO Tracker: With Jio Platforms receiving Sebi approval for its proposed IPO, which is expected to raise around Rs 37,700 crore and which could become India’s largest-ever public issue; and NSE also likely to receive Sebi approval soon for its Rs30,000 crore IPO and expected to launch its public issue in near term; the September month could be the biggest month for IPO market. Apart from Jio and NSE, more than 25 IPOs are expected to be launched during the month.

The list includes a mix of large issuers, mid-sized companies and sector-specific plays across digital platforms, financial market infrastructure, healthcare, manufacturing and consumer businesses. It is pertinent to observe that the improvement in IPO market has come despite the secondary market staying range-bound. Bankers said the better listing performance of recent issues, steady domestic liquidity and a large backlog of companies waiting to list have helped revive the market.

The rush of IPOs in July and August was a reflection of pent-up supply that had been put on hold due to volatile secondary market conditions in the first half of the year. While demand has improved, analysts say investors remain selective. Companies with stretched valuations may still have to cut issue size, reduce pricing expectations or wait longer.

Don’t despair amid the inevitable setbacks that all investors face, especially during a crisis in the market. If the reasoning behind the investment is sound, stick with it, and it should eventually turn around.

FUTURES & OPTIONS / SECTOR WATCH

On the back of selling pressure seen at higher levels, both the Nifty and the Bank Nifty closed with modest losses during the week ended. The settlement week saw Nifty and Bank Nifty rollovers improving to 77.39 per cent and 79.19 per cent, respectively, indicating stronger rollover activity and a positive start to the September series. Nifty’s rollover zone of 24,250–24,300 continues to strengthen the 24,000 base, while 24,300 remains a key level for the bullish outlook.

Among sectors, IT, Metal and Pharma were the top performers, posting healthy gains. In the options segment, strong Call open interest for Nifty was observed at the 24,200 and 24,300 levels while major Put open interest was concentrated at the 24,100 and 24,000 levels. For Bank Nifty, significant Call open interest was seen at 58,000 level whereas notable Put open interest was also placed at the 57,500 level indicates an important level for upcoming sessions.

Implied volatility (IV) for Nifty’s Call options settled at 9.47 per cent while Put options concluded at 10.37 per cent. The India VIX, a key indicator of market volatility concluded the week at 11.06 per cent. The Put-Call Ratio Open Interest (PCR OI) stood at 1.12 for the week. The index is holding above its 20-week moving average at 24,036 but remains below the 100-week moving average at 24,423. The weekly RSI at 50.07 is neutral, while the MACD has recovered from negative levels.

For Nifty, 24,200-24,300 zone remains the immediate resistance, with a sustained move above 24,400 opening the way towards 24,500-24,600. On the downside, 24,100-24,000 remains the key support zone, with a break below 24,000 potentially exposing the index to 23,800. Bank Nifty faces resistance near 57,800, and a sustained move above this level could improve sentiment. Sensex rollover also rose sharply to 77.91 per cent, with the index trading near its 77,800–77,900 rollover zone.

For the upcoming week, the index is likely to face resistance in the 24,400–24,500 zone while 23,900-23,800 zone is expected to act as an important support. Traders should focus on risk management and avoid taking aggressive directional bets until the market stabilises. The sharp divergence and heightened volatility indicate uncertainty, making stock-specific opportunities more attractive than broad index exposure.

Stocks looking good are Adani Power, BHEL, CAMS, SRF, SAIL, Supreme Inds and Vedanta. Stocks looking weak BDL, GMR Airport, Jio Financial, Jubilant Foods, Prestige Estates and VBL.

STOCK PICKS:

Oil Country Tubular Ltd (OCTL)

The company is the sole manufacturer for Kelly’s and Heavy Weight Drill pipes in the OCTG pipe product portfolio. It has undertaken strategic steps towards re-establishing its Engineering Division. The Engineering Division’s plant and machinery commenced operations, with additional machines inducted into the existing facility and technical personnel recruited to strengthen operational capability.

The Division also successfully completed its AS-9100D audit. The company is strategically expanding its focus across the Defense, Aerospace, Power, and Critical Engineering Machining Components sectors. This diversification is intended to transition the company’s revenue base from reliance on a single industry vertical to a multi-sector portfolio, thereby enhancing revenue stability and supporting sustained long-term growth.

In the defense segment, the company is exploring an opportunity with the Defence Research and Development Organisation (DRDO) to be engaged as a Development-cum-Production Partner (DCPP) for manufacturing of rocket motor casings. The company has further participated in tenders floated by Defence Public Sector Undertakings (DPSUs), and with the requisite team now in place, has secured select orders which are currently under execution.

Within the aerospace sector, the company continues to strengthen its team through the recruitment of senior industry talent and is engaged in ongoing discussions with various aerospace companies for vendor registration.

With AS-9100D certification underway and a strengthened senior leadership team in place, the company is taking deliberate strategic measures to position itself as a preferred vendor to Tier-2 and Tier-1 aerospace players. Stay invested and add on declines for surprising three figure gains in medium term.