Market Overview and Sentiments As Investors Prepare for New Week

By Malvika Gurung

Investing.com -- The domestic market indices ended lower for the fourth week in a row last week amid multiple disappointing global and domestic macroeconomic data weighing on Indian equities and the overall market sentiment.

Benchmark indices Nifty50 and Sensex declined 0.61% and 0.57% respectively, in the August 18-ended week, led by a sharp fall in IT stocks, and market heavyweights including TCS (NS: TCS ), Hero MotoCorp (NS: HROM ), Tech Mahindra (NS: TEML ), Infosys (NS: INFY ) and Hindalco (NS: HALC ) exerted pressure.

Indian indices encountered a week of vulnerability due to adverse global and domestic cues, accompanied by a shift towards safer assets by investors like the USD. Discouraging domestic industrial production, negative wholesale inflation, and elevated CPI inflation contributed to market volatility, said Vinod Nair, Head of Research at Geojit Financial Services, in a note sent to Investing.com.

Additional strains emerged from stronger-than-expected US retail sales data; adding to Fed rate hike fears, concerns about US bank rating downgrades, and a sudden Chinese central bank rate cut hindered recovery and sustained selling pressure.

Escalating US bond yields are predicted to restrict foreign investments in India, further impacting market dynamics, Nair stated.

“Investor sentiment remains subdued due to the high volatility of the global currency market, leading to a high depreciation of EM (emerging market) currencies, which affects the performance of equities,” he added.

Higher US bond yields and default risk in China are poised to prompt FIIs to adopt a more prudent stance when considering investments in emerging markets.