Indian stock markets ended lower in a holiday-shortened week, with the benchmark NSE Nifty index posting its second consecutive month of negative returns in August. The decline was primarily attributed to concerns over potential US tariffs on Indian exports and overall market volatility.

Market Performance

The BSE Sensex fell by 270.92 points (0.34%) to close at 79,809.65, while the NSE Nifty dropped 74.05 points (0.30%) to end at 24,426.85. For the month of August, the Nifty recorded a decline of 1.38%, marking two straight months of losses for the index.

Key Highlights

• The Nifty traded within a narrow 816-point range throughout August.
• A sharp reversal in the final leg of the month saw the index shed over 700 points in just six trading sessions.
• The Bank Nifty significantly underperformed, declining by 4% in August.

Technical Analysis

Technical indicators suggest a bearish trend:

• Nifty is currently trading below its 20-day, 50-day, and 100-day Exponential Moving Averages (EMAs).
• The daily Relative Strength Index (RSI) has dipped below 40, indicating weakening momentum.
• The 200-day EMA zone of 24,300-24,250 emerges as a crucial support level.
• Resistance is observed at the 24,650-24,700 range.

Futures and Options

The Nifty futures rollover increased to 83.63% from July's 75.71%, suggesting heightened activity in the derivatives segment.

Sector Outlook

Based on rollover data:

• Automobile, Consumer Durable, and FMCG sectors show promise.
• Banking and financial services sectors face headwinds.

Corporate News

Reliance Industries, a market heavyweight, broke down from a 26-day consolidation phase during its Annual General Meeting (AGM), adding to the market's downward pressure.

Looking Ahead

As the market enters September, investors and traders will be closely monitoring developments regarding potential US tariffs on Indian exports. The technical support level at the 200-day EMA zone (24,300-24,250) will be crucial in determining the Nifty's short-term trajectory. Market participants should also keep an eye on global cues and domestic economic indicators for further direction.

Indian markets faced a turbulent day as multiple headwinds converged, sending the Nifty and Sensex tumbling. The benchmark Nifty index plummeted 255.70 points to close at 24,712.05, while the Sensex saw a sharp decline of 849.37 points, settling at 80,786.54.

US Tariffs Cast a Shadow

Gift Nifty, an early indicator of market sentiment, signaled weakness following the implementation of US tariffs on Indian goods. The US Department of Homeland Security has outlined procedures for additional tariffs of up to 50% on imports from India. In response, India has denounced these duties as unfair and unjustified, setting the stage for potential trade tensions.

Foreign Investors Continue Exodus

Adding to the market woes, Foreign Institutional Investors (FIIs) maintained their selling spree. On the day, FIIs offloaded Indian equities worth Rs 6,516.49 crore, pushing the total selling to a substantial Rs 23,255 crore. This persistent outflow has been a key factor in the recent market downturn.

Rupee Under Pressure

The Indian rupee also felt the heat, depreciating 12 paise to close at 87.68 against the US dollar. This weakening of the domestic currency could further impact investor sentiment and potentially influence foreign investment flows.

Expiry Day Dynamics

Market participants are bracing for additional volatility as they navigate the final Thursday expiry for Nifty contracts. The impending shift to Tuesday expiries adds an element of uncertainty to trading strategies and could contribute to market fluctuations.

Technical Outlook Turns Bearish

Technical analysts have sounded a note of caution as the Nifty breached critical support levels. The index has fallen below the psychologically important 24,800 mark and has dipped under its 50-day Exponential Moving Average (EMA), suggesting potential for further weakness.

Mixed Asian Markets

The broader Asian markets presented a mixed picture, with most indices declining. However, Japan's Nikkei bucked the trend, managing to eke out a 0.3% gain amidst the regional gloom.

As Indian markets grapple with these multiple challenges, investors and traders alike will be closely monitoring global cues, domestic economic indicators, and policy responses. The interplay of these factors will likely shape market sentiment and direction in the near term.