Market Outlook: Q2 results, auto sales, PMI data key factors for next week

The Indian equity indices witnessed a sharp rally last week as Sensex and Nifty both made new all-time highs of 85,978.25 and 26,277.35 respectively. Now, the market outlook for next week looks very positive, experts said.

The outlook for the market will be guided by movements in commodity prices, the US dollar index and key macroeconomic data from the US will also be pivotal in shaping the market’s direction. Additionally, geopolitical developments will continue to be a key factor on the global stage.

On the domestic front, manufacturing and services PMI data, upcoming monthly auto sales data and quarterly results from companies could drive stock-specific movements in the near term.

Last week, the key benchmark indices, Nifty and Sensex continued their upward momentum for the third consecutive week, reaching fresh all-time highs. This rally was supported by the growing optimism about reducing borrowing costs by major Central banks including RBI after the US Federal Reserve cut key benchmark rate by 50 bps in the week ending September 20.

On Friday, Sensex closed at 85,571, down 264 points or 0.31 per cent. Nifty settled at 26,178, down 37 points or 0.14 per cent.

Among sectoral indices, metal emerged as the top performer, followed by auto. The PBoC (People's Bank of China) cut the amount of cash that banks must hold as reserves by 50 basis points, the second reduction this year aimed at bolstering faltering economic growth.

On the domestic front, strong foreign inflows further bolstered market sentiment. In September, foreign institutional investors (FIIs) invested Rs 25,215.25 crore in the cash segment this month so far, while domestic institutional investors (DIIs) invested Rs 25,214.25 crore in the cash segment.

Vishnu Kant Upadhyay, AVP of Research and Advisory at Master Capital Services said: "Nifty has delivered a strong weekly closing for the third consecutive month, now trading above 26,000. Market sentiment remains positive, with immediate resistance at 26,500, and a breakout above this level could propel the index towards 26,650."

"On the downside, key support is at 25,900, with a breach potentially triggering selling pressure towards 25,600. Given the prevailing positive sentiment, we recommend a "buy on dip" strategy for traders looking to capitalise on any short-term correction," Upadhyay added.

Santosh Meena, Head of Research at Swastika Investmart said: "Last week, Bank Nifty witnessed some profit booking around the 54,500 level. Immediate support levels are seen at 53,700, 53,300, and 53,000, with the bullish momentum persisting as long as it stays above the 53,000 mark. On the upside, resistance levels are marked at 54,500, 55,000, and 55,500."