Analysts project fragile stock market for few weeks, current trends to continue

Mumbai (Maharashtra) [India], August 3 (ANI): The Indian stock market exhibited volatility over the past week after touching a fresh lifetime high. The benchmark indices closed marginally lower amid mixed signals.
According to analysts, the stock markets witnessed a sharp fall due to the sell-off in the US markets. Weak US manufacturing activity raised concerns that the economy might be slowing faster than anticipated.
After a subdued start, the Nifty index remained range-bound for most of the week. Stock indices settled sharply lower on Friday, ending the week in the red. At closing, Sensex and Nifty were 1.1-1.2 per cent lower at 80,981.95 points and 24,717.70 points, respectively.
However, selective buying in key heavyweights across sectors kept the sentiment positive of the market. During the week, the Nifty briefly surpassed the 25,000 mark but eventually settled near the week's low at 24,717 levels.
The past week saw geopolitical and macroeconomic concerns and central bank policy actions catching up with market sentiments to create a risk-off scenario.
The weak global cues led to profit-booking in the Indian markets on the last day of the week, pushing the index lower. On August 2, Domestic Institutional Investors or DII bought shares worth Rs 16,579.92 crore while Foreign Institutional Investor or FII bought the total value of Rs 14,184.90 crore.
Last week, the investors were also engaged due to the mixed trends in sectoral performances. Among the sectors energy and pharma edged higher, while realty and IT were among the top losers.
"The rate hike by the Bank of Japan and the quantitative tightening announced led to a disorderly unwinding of carry trades across markets, contributing to market falls and the Yen strengthening in a vicious circle," said Ajay Bagga, Market and Banking expert.
Currently, weak global cues are weighing on sentiment, which could lead to further declines, as per the analysts.
"Overall markets are looking fragile with sentiment impacted by the economic slowdown and the potential flash point in the Middle East. This could continue for a few weeks till some positive trigger emerges," Bagga added.
Going ahead, market analysts say that in the next week, the investors will have eyes on the first quarter earnings of the companies, the comments from the Reserve Bank's Monetary Policy Review Committee, and the performance of the US markets.
"In addition to the ongoing earnings season, participants will be closely monitoring the outcome of the MPC's monetary policy review meeting on August 8 for further guidance. Additionally, the performance of the US markets following the recent sell-off will be closely watched," said Ajit Mishra - SVP, of Research, Religare Broking Ltd.
"A potential retest of the short-term moving average, the 20 DEMA, in the Nifty, which is currently around the 24,550 level, is possible. A decisive break of this level could place bulls on the back foot, with the next support at the 24,200 level. On the higher side, 25,100 will continue to act as a strong resistance," Mishra said. (ANI)