Sensex, Nifty this week: From India’s GDP growth to fiscal deficit data, factors that may drive Dalal Street

Last week the Markets showed a negative trend due to persistent concerns over the health of China's economy and U.S. interest rates. This week will mark the start of the new month and traders will be eyeing lots of macro-economic data such as India’s GDP growth, fiscal deficit data, auto sector’s monthly sales number, and Reliance AGM that will keep the markets buzzing.

Economic events: On the economic front, investors will be eyeing the data of Government Budget Value (Fiscal deficit), scheduled to be released on August 31. India's fiscal deficit increased to Rs 4.51 trillion in April-June 2023-24, compared to Rs 3.52 trillion in the same month of the previous fiscal year. On the same day, traders will be eyeing the core sector growth and Gross Domestic Product (GDP) growth data for Q1 FY24.

Besides, S&P Global Manufacturing PMI and Foreign Exchange Reserves data are scheduled to be released on September 01. While India’s most valuable company, Reliance Industries Limited (RIL) will hold its 46th annual general meeting (AGM) on Monday i.e. August 28, 2023.

Market Macros: Vinod Nair, Head of Research at Geojit Financial Services said, "The domestic market experienced another week of losses as Investors were eagerly awaiting insights from Fed officials to gauge the future prospects of rate hikes. Despite a slight softening due to a weak US PMI, US bond yields remained elevated. The US Manufacturing PMI, registering at 47 against an expected 49.3, sparked hopes for an extended rate hike pause.

He added, “Sectors closely tied to the Western economy, like IT and pharma, experienced increased volatility, while domestically-focused mid-and small-cap stocks demonstrated resilience and gained momentum”. The recent RBI MPC meeting minutes reiterated a commitment to managing inflation within the target range amidst elevated domestic inflation. Nevertheless, the expectation of an imminent rate hike remains muted due to the perceived transitory nature of current high inflation levels, Nair said.

US market data: On the global front, investors would be eyeing a few economic data from the world’s largest economy, the United States (US), starting with the Dallas Fed Manufacturing Index on August 28 followed by Redbook, House Price Index on August 29, Goods Trade Balance, Pending Home Sales on August 30, Core PCE Price Index, Personal Income, Initial Jobless Claims on August 31, Non-Farm Payrolls, Unemployment Rate, S&P Global Manufacturing PMI, and ISM Manufacturing New Orders on September 01.

Technical Outlook: Rupak De, Senior Technical analyst at LKP Securities, said the Nifty index has declined to a significant moving average (55EMA) support level. The sentiment is expected to stay bearish as long as the index remains below 19450, where the 21-day Exponential Moving Average (EMA) is positioned on the daily timeframe. If the index decisively falls below 19240, it could potentially lead the Nifty towards the 19000 mark," De said.

Bank Nifty: Kunal Shah, Senior Technical and derivative analyst at LKP Securities, said that "the Bank Nifty index witnessed an ongoing struggle between bulls and bears, resulting in a phase of range-bound trading. The support level is clearly visible around 44000, coinciding with significant put writing, which could act as a stronghold against downward movements.

Conversely, resistance can be observed around 45000, where the highest open interest is seen on the call side, indicating potential selling pressure. A decisive break on either side of this range could trigger trending moves. Despite this, the prevailing bias appears to lean towards the bullish side within the range," Shah said.