Uncertainty looming large amid global headwinds

Spooked by a weak US job data raising the risk of a potential global economic slowdown, sluggish auto sales, weather anomalies in some parts of the country having a direct impact on economy and profit booking in richly valued sectors; the domestic stock markets retreated after a strong two-week rally to end 1.5 per cent lower during the week ended. For the week, BSE Sensex and NSE Nifty indices shed 1.5 per cent each to close at 81,183.93, and 24,852.15 respectively. The BSE Mid-cap index shed 1.4 per cent, while the Small-cap index declined one per cent. After consolidating at all-time highs for better part of the entire week ended on the back of consistent FII buying, the markets tanked on global cues over the weekend.

In the first week of September, FIIs invested around Rs11,000 crore in equity through the exchanges and primary market route. In the near term, on the domestic front, keep an eye on key economic indicators like Index of Industrial Production (IIP) and Consumer Price Index (CPI). These data points will provide important cues for the market’s trajectory, especially amid concerns about global economic headwinds.

One big positive for the economy is sharp fall in crude oil prices by over 10 per cent. Concerns around lower Chinese demand and signals that Libya’s rival factions could be closer to an agreement to end the dispute that has halted the country’s crude exports have kept oil prices under pressure this week. However, it is important to observe movement of rupee against dollar. US stock indices posted steep weekly losses after weaker-than-expected data reignited fears about the health of the US economy. The tech-heavy Nasdaq tumbled 5.8 per cent on the week, its worst performance since January 2022. The S&P-500 fell 4.2 per cent, and the Dow Jones Industrial Average was 2.9 per cent lower.

(The author is a senior maket analyst and former vice- chairman, Andhra Pradesh State Planning Board)