Market correction expected in 2 weeks

On a weekly basis, the markets gained for sixth consecutive week, with benchmark Sensex rallying 393 points to close at 38645, while the broader Nifty rose 123 point to finish at 11,680. We need to note that FIIs have infused over ` 5,100 crores in August — the second consecutive month of inflow — on improvement on the macro front, better Q1 earnings and correction in the mid and small- cap space.

The economy expanded at 8.2 per cent in Q1, the fastest pace in nine quarters, as strong domestic consumption and manufacturing growth overwhelmed any global tradewar worries. At this pace, India looks set to become the world’s fifth largest economy, ahead of the UK.

Weekend auto sales numbers were a mixed bag. Expect the rupee to remain weak in the backdrop of strength in US dollar as well as escalating concerns over trade wars.

Near term trend will be dictated by domestic macro data, FII and DII activity, the movement of rupee against the dollar, crude oil price movement and global cues.

For the week ahead, chartists predict trading range of 38,150- 39,250 and 11,520- 11,850 for the benchmark indices. Support for the indices evident at 38,350 and 38,150 and 11,575 and 11515.

With indices in uncharted territory, after six weeks of stellar run, the market is expected to consolidate in the next few weeks and Nifty is not expected to move above the key overhead hurdle of 11,790 levels for near term. There is a higher possibility of beginning of a sharp downward correction from the highs in the next two weeks. Minor weakness could be expected for the next week.