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Global cues to weigh on sentiment!

ICICIdirect Research 06 Sep 2024 DISCLAIMER

Nifty snapped three-week winning streak led by global volatility to settle 1.4% lower as fears of US recession resurfaced. Nifty Midcap index corrected 1% while Small cap index closed flat.

Going forward we expect last week highs of 25400 to act as strong hurdle in coming week and Nifty to undergo retracement of past three-week rally as prices reached overbought conditions. Meanwhile stock specific action may continue with key support for index at 24500 levels where supportive efforts are expected to emerge.

Seasonality: Historically, September has been a month with elevated volatility both domestically and globally. With Nifty already witnessing three-week rally, we expect markets to witness bouts of volatility and undergo short term corrective phase. From structural point of view, this will only make long term trend healthy

Brent on verge of breakdown: Brent prices were down 7% during last week as fear of slowdown and higher US production weighed on sentiment.

Breadth: Over past 10 sessions, on 70% occasions breadth was in favour of declines indicating profit taking after a good run up. This may continue for next few sessions.

Sectorally, Pharma, FMCG , IT are expected to relatively perform better. PSU banks appear oversold technically and are poised for a bounce back.

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