Bulls may come out in full force

The Nifty rose for the sixth week in a row, posting its longest stretch of the weekly gains. The 50-share index gained 1.07%, or 123 points, in the last week and 2.85% in the August month to close at 11680. The mid and small cap indices also gained by 1.94% and 1.81% respectively.

Except for Infra and Media, all the sector ended in green. The Bank Nifty gained 0.82% again backed by a rally in the PSU Banks. Metals firmed by advancing 4.66%. JSW Steel was the stellar gainer rising ~12% post the announcement of JSW steel replacing Lupin in the Nifty50 effective from September 28, 2018. Hindalco also rose 7%. The IT and Pharma sector gained 3.61% and 3.28% respectively tracking weaker rupee which slipped to a fresh record low of 71 against the greenback. The Indian currency has now lost nearly 10% since January.

The foreign institutional investors (FII) bought equities worth Rs 995 crore while the domestic institutional investors (DII) bought shares of Rs 2,823 crore in the month of August.

In the last week highlights, worries of a trade war between the US and China intensified after the US President Donald Trump indicated preparing to impose tariffs on $200bn worth of Chinese goods and threatened to pull out of the WTO which spooked the market sentiment across the globe. India's economic data released on last Friday in which India's April to July fiscal deficit stood at Rs 5.40 lakh crore while India's Q1FY19 real GDP grew 8.2%, fastest in nine quarters led by consumption and investment growth. The real GVA also grew 8% on account of a pick-up in industrial growth (+10.3%) and better agricultural growth of 5.3%.

TCS reclaimed its top rank company with market capitalisation of Rs 7.95 lakh crore. YES Bank plunged 8% after the Reserve Bank of India (RBI) allowed present CEO to continue his position till further notice. TCS, Infosys, Reliance, ITC, Nestle, Bajaj Finance, RBL Bank, Tech Mahindra, JSW Steel etc. hit their new highs.

Last week, Nifty hit its new life high of 11760 in the spectacular sprint for the month and then corrected on later part of the week amid concern over rising rupee and crude prices which rose to $77.50/bbl. This may lead to rising twin deficits along with the trade war concerns. Consumption stocks rally paused post monsoon deficit still remained at 6% in this final spell and profit booking in Private sector banks stocks which set off the gains in Pharma and IT sector stocks.

Key global events to look for this week include the US July month trade balance releasing on Wednesday, ADP non-farm employment change, final services PMI, China August month Trade balance on Thursday. The US unemployment data will be released on Friday. India's Nikkei August Manufacturing PMI will be declared today and Services PMI will be released on Wednesday. The automobile companies will announce their August month sales numbers during the week. US markets are closed today in observance of Labour Day,

Last week, Nifty traded in a narrow range with upward bias post the concern over rising rupee and crude prices along with global trade war. For the week Nifty will have a positive start with the booster of GDP data announcement with Auto, Pharma, PSU Banks stocks in focus. The probable Nifty trading range for this week could be 11500-11850 with a key support level at 11630, a breach below this can drag Nifty to 11500.

POSITIVE START

• Nifty will have a positive start with the booster of GDP data announcement with Auto, Pharma, PSU Banks stocks in focus
   
• A breach below the support level of 11630 can drag Nifty to 11500 during the week

The writer is VP- Retail Research, Motilal Oswal Financial Securities