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Index to consolidate amid overbought readings; stock specific action to continue

ICICIdirect Research 02 Aug 2024 DISCLAIMER

Nifty close the week on flat note after hitting 25000-mark, discounting prospects of interest rate cut in US in September. Global volatility weighed on sentiments leading most major equity indices to decline. In the coming week, we expect Nifty to face profit taking, as 18% rally from Election lows led prices to overbought readings and no major events are now lined up. Expect Nifty to consolidate in the 24600-25200 band amid stock specific action, while global cues would drive the sentiments. Mid and Small cap indices have rallied >25% from election lows in a span of two months. Expect profit taking/consolidation in these indices over next few sessions amid overbought conditions

Market breadth
: Percentage of stocks above 50-day ema have decelerated on weekly basis from bullish extreme reading of 86% to 80% while indices made new highs. This divergence in breadth indicate profit taking at higher levels. Sectorally, Oil & Gas, Pharma, Power, consumption are expected to do relatively better.

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