D-Street overcomes CAS pain to post weekly gains

India's broadest equity indices, which retreated marginally Friday, still managed to notch up weekly gains in rollercoaster trading as stocks swung between gains and losses after the rollout of the closing auction system (CAS) that seeks to reduce extreme volatility in closing prices. However, sentiment improved through the first trading week in August amid a fall in global oil prices.

On Friday, the Nifty fell 65.35 points, or 0.3%, to close at 24,570 points. The Sensex declined 455.59 points, or 0.6%, to end at 78,499 points.

For the week, however, the Nifty gained 0.8%, while the Sensex climbed 0.5%.

Rajesh Palviya, head of research, Axis Securities, said market sentiment improved as peace talks in West Asia eased geopolitical concerns, leading to a retreat in crude oil prices. He also said the CAS teething troubles should end soon.

"Domestically, the implementation of CAS created some uncertainty, but Friday's trading session ended on a normal note, and we expect market functioning to remain stable going forward," he said. "Traders, however, should continue exercising caution on weekly derivatives expiry days."

Brent crude oil futures had fallen to about $81.8 on Friday evening, down nearly 0.9% over the previous day.

"The markets witnessed a broad-based rally this week, with selective strength in the mid and small caps," said Aamar Deo Singh, senior vice president, research, Angel One. "Improved global sentiment due to the easing of geopolitical tensions supported buying interest in pockets - financials, pharma, and IT."

Fear Gauge Up a Tad

Singh also said that the central bank's upward revision of the FY27 growth forecast to 6.7% during the monetary policy review this week, coupled with a downward revision of the inflation forecast for the fiscal year, boosted investor confidence.

The Nifty Midcap 150 was up 0.2%, while the Nifty Small-cap 250 ended flat Friday. These two broader-market indices have risen 1% and 2.4%, respectively, this week.

On Friday, the market's fear gauge - the Nifty's Volatility Index or VIX - marginally climbed to 12.18.

Palviya of Axis said he remains bullish on the Nifty and expects the index to cross 24,700.

"A sustained move above this could open the door to the 24,900-25,000 zone, while 24,450 should serve as the stop-loss for long positions," he said. "We continue to favour auto, pharma, new-age companies, and IT, while select metal and power stocks also appear well positioned."

Elsewhere in Asia, China advanced 1%, Hong Kong rose 0.5%, while Japan fell 0.1%, South Korea declined 0.6% and Taiwan dropped 0.4%.

The pan-Europe index Stoxx 600 was up 0.6% at the time of going to print.

Angel One's Singh said investors should be cautious about geopolitical uncertainties, but he does not see much downside from current levels.

Foreign portfolio investors net bought shares worth Rs 480 crore. Domestic institutions were buyers to the tune of Rs 236 crore.