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In the week gone by, domestic markets were under pressure, reversing a five-week gaining spree. The Nifty managed to close above the 17,500 mark. The Sensex settled a tad above 58,750 level. The selloff in domestic markets was led by volatility in global markets on worries over the US debt ceiling crisis along with an uptick in yield and crude oil price, continued worries over the Chinese economy and Eurozone inflation has hit its 13 years high level of 3.4% in September owing to high energy costs.

This week Sensex dropped 1,282 points or 2.1% to settle at 58,765. Likewise the Nifty 50 index fell 321 points or 1.7% to settle at 17,532. Unlike the benchmark indices broader markets ended the week with gains. The BSE MidCap index added 29 points or 0.12% to 25,244 whereas the BSE SmallCap index ended the week at 28,215 advancing 192 points 0.69%.

“With this week’s price action, Nifty has finally snapped its recent winning streak as it ended with nearly couple of percent cut. Although, this week so far, Nifty came off a bit from its all-time highs, it may not be a wise ploy to stay sceptical; but the kind of time-projections and negative divergence in momentum oscillators are showing it will be prudent to stay cautious on the market,” said Sameet Chavan, Chief Analyst at Angel One.

Top gainers

Despite the selloff in benchmark indices, some 258 or 52% constituents of the BSE 500 index ended the week with positive returns. With a gain of 29.55% Triveni Turbine was the top performer of the week as its shares rallied from Rs 134.35 on September 24, 2021 to Rs 174.05 on October 01, 2021.

IDBI Bank (up 28.87%), Gujarat Alkalies And Chemicals (up 21.99%), Trident (up 21.49%), IRB Infrastructure Developers (up 20.86%) and Godfrey Phillips India (up 20.76%) were the other stocks that rallied over 20% the week.

Outlook

Trading could be volatile in the forthcoming week as market participants would closely track e Reserve Bank of India’s (RBI) monetary policy committee (MPC) will announce its interest rate decision on Friday, 8 October 2021.

Trends in global markets, the movement of rupee against the dollar and crude oil prices, investment by foreign portfolio investors (FPIs) and domestic institutional investors (DIIs) will be watched. On the macro front, Markit Services PMI for September will be declared on 5 October 2021.
Overseas, markets in mainland China are closed for the Golden Week holiday from Friday, 1 October 2021 till 7 October 2021.

Besides investors would keep an eye on Washington as Congress passed a bill that would fund the government through early December. The bill would avert a government shutdown but Congress still has not raised the debt ceiling, which Treasury Secretary Janet Yellen says will be reached on October 18.
Yellen and Fed Chair Jerome Powell testified before the House Financial Services Committee on Thursday. Yellen reiterated her call for Congress to raise the debt ceiling, saying that failure to do so would be catastrophic.

The US Non Farm Payrolls data for September will be announced on 8 October 2021.

“Markets are likely to continue with its consolidation amidst weak global cues. Though the domestic cues remain positive as the fresh Covid cases continue with its declining trend resulting in increasing economic activities, the stratospherically high valuations along with multiple global concerns would keep markets highly volatile. Amidst this backdrop, intermittent profit booking is likely to continue and investors would keep trying to move towards under-valued stocks from outperforming sectors. Small traders should be cautious and adopt stock specific approach. Investors can adopt buy on dip strategy as the long term fundamentals remain intact,” said Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services