Sensex, Nifty to start lower; July auto sales numbers, RBI MPC, PMI data to set market tone this week

Markets seem to be in a consolidation mode with momentum slowing down in the last couple of sessions.

Domestic equity benchmarks BSE Sensex and Nifty 50 may stare at a weak opening on Monday as SGX Nifty declined over half a per cent. Last week, both the headline indices fell more than one per cent on a weekly basis. A host of factors such as trends in coronavirus cases, RBI monetary policy, macro-economic data release and corporate earnings, July auto sales numbers, among other factors will set the market direction for this week. Analysts have been advising to focus on stock-specific developments. “Markets seem to be in a consolidation mode with momentum slowing down in the last couple of sessions. This trend is expected to stay since the uncertainties continue and volatility remains high. Investors are advised to remain cautious and accumulate quality stocks in this uncertain environment,” said Vinod Nair, Head of Research at Geojit Financial Services.

SGX Nifty indicate weak start: Trends on SGX Nifty suggested a weak opening for Sensex and Nifty on Monday. Nifty futures were trading 62.70 points or 0.56 per cent lower at 11,042 on Singaporean Exchange.

GST collection falls in July: The Goods and Services Tax (GST) collection in July 2020 has fallen to Rs 87,422 crore. In the previous month, the government had collected Rs 90,917 crore, according to a finance ministry statement.

Global markets: Asian stock markets were trading mixed on Monday as US-China tensions continue to escalate. In Japan, the Nikkei 225 jumped 2.08%, while the Topix index advanced 1.49%. While in overnight trade on Wall Street on Friday uncertainty about the government’s next round of coronavirus aid kept investors jittery. The Dow Jones Industrial Average rose 0.44%, the S&P 500 gained 0.77%, and the Nasdaq Composite added 1.49%.

India’s June infrastructure output contracts: India’s infrastructure output contracted 15 per cent in June from a year earlier, government data released on Friday showed. It had declined 22 per cent decline in May and 37 per cent in April. This is the fourth consecutive month of contraction in the core sector.

FII and DII data: Foreign institutional investors (FIIs) sold shares worth Rs 958.64 crore while domestic institutional investors (DIIs) bought shares worth Rs 442.73 crore on a net basis on Friday, according to the provisional data available on the NSE.​

Technical analysis: “The short term trend of Nifty is slightly negative amidst a range movement. Important lower supports to be watched for the resumption of downtrend is at 11000 levels. The overall pattern signals a possibility of upside bounce from here or from the lows. Immediate resistance for the next week is placed around 11300-11350,” said Nagaraj Shetti, Technical Research Analyst, HDFC Securities