Weekly Market Analysis: Nifty Hits New Highs, Top Stocks to Watch, and Latest Economic Updates

Markets had a solid week of recovery, climbing up over 2% from last Friday's levels. Here's our take on this week gone by, some stories you might have missed out on, and our thoughts on what to do going ahead, in your weekly report.

Weekly Recap

Breathing and recovering

• After a couple of wobbly weeks for global markets, the Nifty returned to positive territory, providing investors with a solid 2.03% weekly return and reaching new all-time highs.
• The broader indices also reached new record levels and moved in sync with the main indices, buoyed by global optimism about potential rate cuts, which positively influenced markets across the board.
• Volatility also saw a significant decline, with the India VIX dropping 12% over the course of the trading week.

What changed?

• US inflation figures reached a three-year low at 2.5% for the 12 months leading up to August, suggesting a greater probability of a 25 bps rate cut by the Fed next week. 
• At home, Industrial Production Index (IIP) growth for July climbed to 4.83%, accompanied by a slight rise in inflation to 3.65%, driven by an uptick in food inflation.

The winners

• Bajaj Auto emerged as one of the top performers last week, reaping the benefits like many in the auto sector, from the newly approved PM E-Drive scheme for electric vehicles. 
• Divi’s Lab also performed strongly, buoyed by a combination of positive developments: the government reducing GST rates on cancer drugs and signs of a robust US economy.

The losers

• ONGC continued to be one of the worst performers on the Nifty, sliding 5.6% last week as oil prices continued to decline. Also Read: Brent Crude Slips Below $70: Analysing the Impact on Oil & Gas Stocks
• Tata Motors also had a challenging week, declining 5.5% due to investor concerns over limited growth prospects and a downgrade in its stock rating by UBS.

Meanwhile…

• Asian markets may be in for a bumpy ride in the near-term, as China’s industrial output growth of 4.5% in August fell short of expectations, bolstering the case for stimulus.
• In Europe, the ECB reduced interest rates by 25 bps to 3.5%, as anticipated, citing declining inflation and cautioning against sluggish GDP growth in the Eurozone.

Market Brief

Market Outlook

Our take

• With the Nifty soaring to new all-time highs last week and a renewed sense of optimism in the markets, the forecast for the coming week looks more promising.
• However, with the upcoming Federal Open Market Committee (FOMC) meeting on the horizon, we anticipate a cautious market sentiment. Consequently, we expect the Nifty to trade within a range of 25,000 to 25,600 next week. 

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