Hello Readers,

Here’s the week in a recap…

Indian markets remained cautious this week as global rate concerns and foreign investor selling kept sentiment subdued. But it wasn’t all pressure, with softer crude prices, a firmer rupee, and strong domestic buying offering some support. Meanwhile, select sectors managed to buck the trend, while investors also kept an eye on a major upcoming IPO and key economic cues. Here’s what moved the markets and what investors will be watching next.

Weekly Overview

Indian equity markets ended the week lower, with the Nifty 50 declining 0.31% to close at 24,175.65, while the BSE Sensex fell 0.36% to settle at 77,264.51. Both benchmark indices, however, ended Friday on a positive note, with the Nifty 50 gaining 0.35% and the Sensex increasing by 0.43%, mainly driven by a sharp recovery in IT stocks.

Compared to the benchmark indices, the broader market remained relatively resilient during the week. The Nifty 500 declined marginally by 0.01%, while the Nifty Midcap 150 gained 0.42% and the Nifty Smallcap 250 advanced 0.44% during the week ended on August 28, 2028. The Nifty Next 50 also gained 0.23%. Meanwhile, the Nifty Bank was down 0.46% during the week.

The India VIX fell 4.82% to 10.66, indicating that market volatility remained contained despite the weakness in the benchmark indices.

Weekly Performance Of Key Indices

(Source: NSE, BSE)

Key Market Triggers

  • Crude Prices Fell Sharply: Crude oil prices declined for the week, providing some relief to the Indian market. Brent crude fell more than 5% to US$89.31 per barrel, while WTI crude declined more than 4% to US$83.40 per barrel. 
  • Rupee Strengthening: The Indian rupee also strengthened around 0.3% during the week to close at Rs 95.3775 per US dollar. This is primarily due to increased dollar liquidity before the closure of the RBI’s special non-resident dollar deposit scheme. MSCI index rebalancing and inflows related to that also helped the rupee gain against the US dollar. 
  • FIIs Turned Net Sellers: Coming to foreign investors, they sold around Rs 2,060 crore of Indian equities during the week ended August 28; however, they remained net buyers during August with around a net purchase of little over Rs 450 crore. On the other hand, DIIs bought around Rs 19,310 crore during the week, providing strong support to the market. 
  • Fed Rate Outlook Weighed On Markets:  Following Kevin Warsh’s comments at the Jackson Hole event, the probability of a September rate hike increased to around which has also weighed heavily on global equities, including the Indian equity market. 
  • Industrial Output Growth Slowed: India’s industrial output growth slowed to 6.7% year-on-year in July, from a revised 8.8% in June, which also weighed on investors’ sentiment. 
  • Jio IPO Gets SEBI Approval: Another major development was SEBI’s approval for Jio Platforms’ US$3.8 billion IPO, which could become India’s largest-ever listing. 

Weekly Sectoral Performance

Coming to sectoral performance during the week, Nifty Midsmall IT & telecom led the markets with a rise of 3.61% across the week; Nifty Metal followed with gains of 2.68%, and Nifty IT closely followed with a rise of 2.45% during the week. 

On the flip side, Nifty FMCG was down 1.46%, followed by Nifty Oil and Gas by 1.03% and Nifty Auto losing around 0.94%. 

Wrapping Up

Indian equities came under pressure for another week, as concerns over a US interest rate hike in September, FII selling domestic equities, and global market uncertainty weighed on investors’ sentiments. However, lower crude prices, a stronger rupee, and strong DII buying provided some support to the domestic market, restricting the market from falling sharply. The resilience of mid- and small-cap stocks also remained positive. Going ahead, investors will track the US rate outlook, crude prices, FII flows, India’s upcoming GDP data, and developments around the Strait of Hormuz for further market direction.