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Indian equities are likely to remain guided by a mix of domestic growth data, global market cues, crude oil prices and institutional flows this week, with investors tracking India’s first-quarter GDP data and the US non-farm payrolls report for fresh direction.

On Friday, August 28, benchmark indices, the BSE Sensex and NSE Nifty50, ended higher, snapping a two-session losing streak. The Nifty50 closed at 24,178, up 85 points, or 0.35%, while the Sensex settled at 77,264 , gaining 331 points, or 0.43%. Market breadth was positive, with 1,918 stocks advancing on the NSE against 1,561 declines, while 124 stocks remained unchanged.

Analysts said the Nifty 50 remains in a broader consolidation phase, with the technical setup finely balanced. The index has retained a positive bias on the weekly timeframe but continues to face resistance at higher levels.

Key factors likely to decide Nifty bulls’ fate:

1) GDP data to offer clues on domestic growth

The week will begin with India’s first-quarter GDP data, which will offer fresh cues on the domestic growth trajectory.
GDP is expected to have grown by a median 7.3% in the April-June quarter, according to an ET poll of 10 economists, with resilient consumption and exports, along with robust government capital expenditure, supporting growth despite supply chain disruptions and elevated commodity prices.Hariselvan Radhakrishnan, Founder and CEO of HST Wealth, said a series of important domestic and overseas macroeconomic releases would be in focus as investors look for fresh direction after a largely range-bound market.

“India’s first-quarter GDP data on Monday will offer insights into the domestic growth trajectory, while Friday’s US non-farm payrolls report is expected to influence global market sentiment as investors reassess expectations for the Federal Reserve’s September policy decision following Kevin Warsh’s hawkish Jackson Hole address,” Radhakrishnan said.

Vinod Nair, Head of Research at Geojit Investments, said investors would also track business-sentiment readings and the domestic GDP print for further direction on growth and the global rate trajectory.

2) US jobs data, global markets in focus

The US non-farm payrolls report, due on Friday, September 4, will be closely watched as markets assess the outlook for the Federal Reserve’s September policy decision following Kevin Warsh’s hawkish Jackson Hole address.

Ponmudi R, CEO of Enrich Money, said the August jobs report and the next inflation reading would be key data points in shaping expectations around US monetary policy.

Global market cues will also remain important, with investors tracking the US dollar and Treasury yields. Ponmudi also highlighted the rupee as an important variable, while Nair said the hawkish undertone in the RBI’s August meeting minutes had kept upward pressure on domestic bond yields.

3) Crude oil, Strait of Hormuz remain key

Crude oil prices will remain a key market driver this week, with developments around the Strait of Hormuz likely to influence the geopolitical risk premium. Oil prices fell more than 5% last week, with brent crude settling at $89.31 a barrel on Friday, as traders weighed stalled US-Iran diplomatic talks against the resumption of some crude flows through the Strait.

“Any sustained improvement in shipping flows could further reduce the geopolitical premium in crude oil and provide relief to emerging-market equities, while renewed disruptions could quickly reverse that trend,” Ponmudi said.

Nair said the recent decline in crude prices, along with a firmer rupee and softer US yields, had helped cushion Indian equities against geopolitical concerns.

“US sanctions on Iran fell short of market expectations, triggering a sharp slide in crude and easing imported-inflation worries. This relief on the energy front, coupled with a firmer rupee and softer US yields, cushioned sentiment against lingering West Asia tensions,” Nair said.

4) FII, DII flows on radar

Institutional flows will remain another important factor for the market, particularly as foreign investors continue to show bouts of heavy selling.

According to Ponmudi, FIIs turned aggressive sellers on Friday, recording net outflows of around Rs 5,040 crore. However, this was largely offset by DII buying of approximately Rs 5,184 crore.

On a month-to-date basis, FIIs remained marginal net buyers at around Rs 454 crore, while DIIs recorded inflows of approximately Rs 79,620 crore.

Ponmudi said the continued strength in domestic institutional participation remained an important stabilising factor, helping limit the impact of foreign selling.

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5) AI trade keeps IT stocks in focus

Global technology sentiment is likely to remain relevant for Indian IT stocks after Nvidia’s strong results and upbeat guidance reinforced optimism around sustained AI investment.

“IT outperformed after Nvidia’s strong results and upbeat guidance reinforced optimism around sustained AI-related investments, which could benefit firms involved in enterprise AI deployment and workflow integration,” Nair said.

Ponmudi also flagged global technology sentiment as an important driver for Indian IT stocks, with upcoming earnings from Broadcom and Micron potentially influencing sectoral rotation.

6) Metals, FMCG and upstream stocks in focus

Sectoral moves are likely to remain driven by commodity prices and global cues.

Nair said metals led the gains on firm commodity prices and improving realisation prospects, while softer crude prices weighed on upstream producers. FMCG stocks also retreated amid concerns over rising input costs.

7) Technical setup remains finely balanced

On the weekly timeframe, the Nifty remains in a consolidation phase with a positive bias, according to Radhakrishnan. The index is holding above its 20-week moving average at 24,036 but remains below the 100-week moving average at 24,423. The weekly RSI at 50.07 is neutral, while the MACD has recovered from negative levels.

A sustained close above 24,190-24,335 could pave the way for a move towards 24,710, while a break below 24,000 could trigger deeper weakness, Radhakrishnan said.

Ponmudi said the 24,200-24,300 zone remains the immediate resistance, with a sustained move above 24,400 opening the way towards 24,500-24,600. On the downside, 24,100-24,000 remains the key support zone, with a break below 24,000 potentially exposing the index to 23,800.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

This article was written by

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in FFUT over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

September brings a cluster of events that will shape the macro narrative into year-end. A Xi-Trump meeting, German state elections, a Federal Reserve decision with a new Summary of Economic Projections, and an ECB meeting that is not finished

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