Nifty Reached 17000 New Milestones!
In the terror of August 3rdrd A mix of covid waves, fears of shrinking US Federal Reserve and global cues saw both nifty and sensex surge towards the end of the month, reaching new milestones of 17K and 57K respectively, August was the best-performing month outside of February 21 this year. The market is up 8.7% this month. This is largely due to a recovery in consumer spending, improved manufacturing, the dovish stance of the government and tighter regulation in China making India a more viable investment destination for his FII. After a sharp contraction of 24.4% in the April-June quarter of FY2020-21, recent GDP data show GDP grew by 20.1% in the April-June quarter of FY2021-22 . Global markets, including the US, were also positive last month, but the Indian market outperformed all others.
Performance by sector
Looking at sector performance in August, we can see that many sectors are performing positively. Few sectors such as IT, fast-moving consumer goods, financial services and banking have outperformed. Few sectors lag behind, including media, metals, real estate and PSU Bank. Our market outlook remains positive this month with a number of positive factors, including strong momentum, even though the market is at an all-time high after a huge breakout of over 17k. All sectors are generally doing well, but banking, metals, autos and financial services could gain momentum. Last month’s rally was led by large caps, so looking at the uptrend, mid and small caps could catch up and do well.
Important events and updates
Here are some key events from the last month and beyond:
- FM announced a massive rupee. A National Monetization Pipeline of Rs 600,000 aiming to unlock the value of brownfield projects for infrastructure creation across the country. This will help reduce the fiscal deficit gap. Implementations should be carefully monitored.
- India’s GDP figures released this Tuesday show that the April-June quarter (Q1) of the ongoing financial year 2021-22 (FY22) expanded by 20.1% year-on-year.
- India’s wholesale price index eased to 11.16% y/y for July 2021 after hitting a record high in May as announced on the 16th, before eventually falling below 12%.th August
- Immunization Program in India – India’s largest immunization campaign, launched this year, is in full swing. As of September 1st, Covid-19 vaccine doses exceeded 64.5 Cr.
Indian market outlook
The outlook for the Indian market remains positive for the rest of the year, with an upside target of 18,000 given recent big moves.The market looks stretched at this level and we could see some correction at this level, but we likely won’t see a major correction unless there is a macro change or a 3rd Either a wave of the pandemic will have a major impact or there will be a global market event such as a significant liquidity draw by the Fed. Let’s take a look at this month’s fundamental and technical outlook.
Basic Outlook: Positive GDP is expected to continue this month as India becomes an attractive option for investors amid regulatory concerns in China and the accommodative stance of the Indian government. increase. The market traded flat last week just before breaking the 17,000 level and the rally remained polarized. The top 10 stocks on the Nifty 200 outperformed the other 190 stocks by 7-8%. We are heading into the festive season soon, which could have a positive impact on the economy as well. So the market looks like it will continue its uptrend for the rest of the year, with some minor setbacks in between.
Technical outlook: Nifty surpassed a record 17,000 last month, but with strong economic data, the goal is to climb to the 18,000 level by the end of the year. The outlook for the month remains positive, although we may see some correction throughout this bull market, mainly due to concerns about high valuations. Looking at the technicals, September has an immediate resistance at 17600 and a big resistance at the 18000 level. There is immediate support at the 16700 level and great support at the 16200 level. Nifty50’s RSI is around 77, indicating it’s close to the overbought zone.
global outlook
Although the global market outlook remains positive, investors are cautious as delta variant cases are on the rise. The U.S. economy continues to grow at a healthy pace, and the chairman of the U.S. Federal Reserve said at its meeting last Friday that the rise in inflation is likely to be temporary and will continue to monitor the situation closely. repeated to do The Eurozone continued to grow at a strong pace in August and is expected to continue this month, though it may slow down slightly, mainly due to disruptions in his supply chains. Indicators point to a slowdown in China’s economy, with rising infections, new restrictions on movement, supply chain bottlenecks and natural disasters. The outlook remains bright, although some consolidation and minor setbacks are likely.
GOLD Outlook
The gold market is trading flat and corrected in August. Gold in August he stayed in the 47,000-48,000 range. The depreciation of the dollar against the rupee could affect gold rates, reflecting the drop in gold prices in the domestic market since the dollar-to-rupee conversion improved. Gold has been underperforming since mid-2020 due to a strong uptrend in the stock market. There is no big trend and it could be flat for now.
What should the customer do?
We said in our past market outlook that the market was displaying stretched valuations, but the trend is positive. The market has seen a lot of movement, resulting in a staggering return since his fall of March 2020 due to the pandemic. Now it’s worth mentioning the theory of reflexivity to explain this move a bit. Reflexivity in economics is the theory that there is a feedback loop in which investor perceptions affect economic fundamentals, which in turn change investor perceptions. Reflexivity theory states that investors do not make decisions based on reality, but rather on their perception of reality. This process is self-reinforcing and tends toward imbalances, where prices become increasingly detached from reality. George Soros famously formulated the general theory of reflexivity that markets always react to extreme ups and downs, explaining cycles of booms and busts. However, theory has its limits and cannot time market tops and bottoms. Investors should always follow a disciplined approach to investing and follow a prudent asset allocation process.
Also read: here-is-our-look-on-the-markets
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