Buoyedby optimism over GST 2.0, revision of S&P sovereign rating, record-high composite PMI and early signs of an urban demand revival, steps from GOI to support broader economic growth and mildly supportive global cues; markets ended higher for the second consecutive week. The Sensex index rose 709.19 points or 0.87 percent to end at 81,306.8,5, and Nifty gained 238.8 points or 0.96 percent to finish at 24,870.10. The broader indices outperformed with BSE Small and Mid-cap indices jumping 2 percent each. The pace of FIIs selling declined this week, but they remained net sellers, as they offloaded equities worth Rs 1,559.51 crore. On the other hand, DIIs extended their buying in the 18th consecutive week, with purchases of equities worth Rs 10,388.23 crore. In August so far, FIIs sold equities worth Rs 25,751.02 crore and DIIs bought equities worth Rs 66,183.51 crore. It is pertinent to observe that FIIs have not only been sellers in equities but have also trimmed positions in the bond market. The selling has been broad-based, extending to banking and financials, which account for a significant portion of FIIs’ holdings. When we examine the data for secondary and primary market inflows, it becomes evident that FIIs are still participating in the primary market. This indicates their ongoing investment in new themes and businesses, while they are reducing their exposure to sectors that are experiencing slower growth. Despite recent positive developments, such as the S&P Global Ratings upgrade and GST rationalisation failing to meaningfully shift FII sentiment; the concerns around the US–India tariff situation, a strengthening dollar against the rupee, and the jitteriness surrounding Fed Chair Jerome Powell’s upcoming speech at the Jackson Hole symposium—which could shape the September monetary policy outlook—have kept FIIs in a cautious “wait-and-watch” mode. Ahead of the Jackson Hole symposium, US President Donald Trump has criticised Powell multiple times for not cutting rates. In a Truth Social post, Trump referred to Powell as “Jerome ‘Too Late’ Powell” and accused him of not acting promptly to reduce interest rates.
Post commentary from the Jackson Hole Symposium, US investors who had bet on caution from the central bank chief, but Powell’s speech instead highlighted the vulnerability of the labour market and signalled that the Fed could shift its wait-and-see approach. Powell’s comments raised the likelihood of a September cut and possibly another later in the year. US stocks and bonds rallied, the dollar fell and gold rose more than 1 per cent. The swings over the weekend ended days of relative calm in markets, where a lingering tech selloff had dragged on the Nasdaq Composite even as the Dow posted its longest stretch of muted moves in decades. In near term, Indian market is awaiting clarity on whether the additional 25 per cent U.S. tariffs on Indian goods, linked to the import of Russian oil, will be implemented next week. Simultaneously, investors will react at the start of coming week to the outcome of the U.S. Fed Chair’s speech at the Jackson Hole symposium. Despite these external headwinds, domestic economic indicators offer a glimmer of hope. Follow market trends and history. Don’t speculate that this particular time will be any different. For example, a major key to investing in a specific stock is its performance over five years.
FUTURES & OPTIONS / SECTOR WATCH
Mirroring the undercurrent in the underlying cash market, derivative segment showcased sector and stock specific moves during the week ended. On the sectoral front, the Auto index rose 5 percent each, the Consumer Discretionary, Telecom, and realty indices rose more than 3 percent each, while the PSU and Power indices were down 0.5 percent each. In the options segment, maximum Call open interest for the Nifty was seen at 25,000 and 25,100; while maximum Put open interest was seen at 25,000 and 24,800. For the Bank Nifty, the maximum Call open interest is at 56,000 and the Put open interest is at 55,000. Implied volatility for the Nifty Call options settled at 9.93 per cent and for Put options at 10.77 per cent. The India VIX, a key indicator of market volatility ended at 11.37 per cent during the week ended. The Put-Call Ratio for the week stood at 1.0. After showing consolidation-type upward movement towards the resistance of 25200 levels for the better part of the week, Nifty slipped sharply on Friday. Despite news of a GST rate cut, FIIs maintain approximately 90 per cent short positions in index futures. Additionally, market sentiment is cautious due to the looming threat of a 25 per cent tariff on India, with a deadline set for August 27, 2025. The 24,850–24,700 zone is a critical support level that must hold to sustain bullish momentum. A breach below this could see the index slide signalling potential bearish pressure. The National Stock Exchange (NSE) has announced changes to the benchmark Nifty 50 index as part of its semi-annual review of broad market indices. This periodic review is aimed at ensuring the index continues to reflect evolving market trends and sectoral representation, keeping it aligned with the changing dynamics of the Indian economy and stock market. Companies added to Nifty 50 are Inter Globe Aviation (IndiGo): Avg. free-float m-cap: Rs 1,13,908 crore and Max Healthcare Institute Ltd. (MAXHEALTH): Avg. free-float m-cap: Rs 84,555 crore. Companies removed from Nifty 50 are Hero MotoCorp: Avg. free-float m-cap: Rs 52,336 crore and IndusInd Bank: Avg. free-float m-cap: Rs 55,270 crore.
Stocks looking good are AU Small Finance, Cipla, Dr Reddy’s, HDFC AMC, ICICI Lombard, Maruti, M&M and Unominda. Stocks looking weak are BDL, Crompton, Shree Cement, Torrent Power, RVNL, Tata Elexi and Sona Comstar.
(The author is a senior maket analyst and former vice-chairman, Andhra Pradesh State Planning Board)
