Market outlook for the week (25-Aug to 29-Aug)

26 Aug 2025 , 11:19 AM

SECTORAL STORY FOR WEEK TO AUGUST 22, 2025

The week to August 22, 2025 saw Nifty and Sensex gaining +0.97% and +0.88% respectively. During the week, FPIs were net sellers in Indian equities worth $(122) Million, as the sovereign upgrade had limited impact on flows. Here are 20 key sectors for the week.

Sectoral Index	Weekly Returns	Index (22-Aug)	Index (15-Aug)
Nifty Automobiles	5.02%	25,329.45	24,118.80
Nifty Consumer Durables	3.91%	38,787.95	37,329.60
Nifty MNC	3.89%	29,388.10	28,286.60
Nifty Realty	3.45%	909.65	879.35
Nifty Mobility	3.37%	21,756.10	21,046.80
Nifty India Digital	2.53%	9,069.35	8,845.50
Nifty FMCG	1.98%	55,737.45	54,656.30
Nifty IT	1.74%	35,440.85	34,833.20
Nifty Metals	1.73%	9,375.45	9,216.25
Nifty Chemicals	1.63%	30,403.64	29,915.87
Nifty Infrastructure	1.28%	9,106.25	8,991.45
Nifty Oil & Gas	1.17%	11,126.10	10,997.35
Nifty Non-Banks	1.11%	29,564.45	29,241.15
Nifty Healthcare	0.64%	14,738.80	14,644.90
Nifty Capital Markets	0.43%	4,427.20	4,408.05
Nifty Private Banks	0.14%	26,691.85	26,655.00
Nifty Banks	-0.35%	55,149.40	55,341.85
Nifty PSU Banks	-0.39%	6,998.10	7,025.25
Nifty India Defence	-1.11%	7,717.85	7,804.80
Nifty CPSE	-1.31%	6,281.10	6,364.65

Data Source: NSE

For the week, 16 out of 20 sectors delivered positive returns, while 4 gave negative returns. The star themes were Automobiles, Consumer Durables, MNC, and Realty; with autos gaining on news of RBI reducing risk weight on auto loans. Losers included Defence and CPSE stocks. Out of 16 gaining sectors, 6 sectors gained over 2%.

Average returns of 20 sectors stood at 1.54%. The top 5 sectors delivered 3.93% returns, while top 10 sectors gave returns of 2.92%. Bottom 10 sectors delivered 0.16%, showing lot of positive vibes in the market. Going ahead, we could see the expectations of rate cuts in October and the GDP and IIP data factored into markets in coming week.

WEEK THAT WAS; THE GOOD, THE BAD AND THE UGLY

On the positive side, the sovereign upgrade from BBB- to BBB resulted in a positive start to markets, although FPIs remained on the sidelines. The RBI MPC gave a strong indication of another rate cut in October MPC meet. Automobile stocks were among the top gainers in the week after the RBI decided to reduce the risk weights for auto loans from the current 100%. This is likely to be positive for auto stocks and also for auto financiers.

On the downside, the tariff overhang remained with the US now openly accusing India of helping Russia fund the Ukraine war with their oil purchases. The core sector growth at 2.03% for July was lower than June, although the June figure was revised up by 49 bps. The Fed FOMC continues to present a very divided picture with strong arguments on both sides. Of course, the indications from Powell at Jackson Hole was of one rate cut in September.

STOCK MARKET TRIGGERS FOR COMING WEEK TO AUGUST 29, 2025

Here are key triggers that could influence stock markets next week.

• The markets in the coming week are likely to react to the sovereign upgrade, the tariff overhang as well as the Jackson Hole symposium. The overall picture is going to be mixed although higher levels in the market could see pressure.
• The big data point this week will be the Q1 India GDP announcement. This is likely to give the first picture of whether the impact of slower IIP and core sector are felt on the GDP growth. It will also help update the full year GDP growth estimates.
• In other India specific data, the IIP growth for July and the fiscal deficit update as of the close of July will be presented. While manufacturing IIP will hold the key, the update on fiscal deficit will be critical to figure if India is on track for 4.4% fiscal deficit.
• In key US data announcements, the second estimate of Q2 GDP and PCE inflation for July will be published. The PCE inflation will be a key input for September Fed rate action, while the GDP data will give a picture of whether Q2 rebound is sustainable.
• Key global data points. New Home Sales, Fed Speak, Jobless Claims, Retail Inventories, Biege Book, Auto Sales, Factory Orders (US). Consumer Confidence (EU); Jobs, Core CPI, Retail Sales (Japan); PMI, Industrial Profits (China); Auto Production (UK).

What does this mean for Nifty and Sensex levels in the coming week to August 29, 2025.

PARTING THOUGHTS ON NIFTY AND SENSEX LEVELS

VIX tapered from 12.36 to 11.73 levels on sovereign upgrade, although the VIX did bounce from lows of 10.70 levels this week.

• Nifty closed the week at 24,870 Spot. Nifty has immediate support at 24,791 and major support at 24,566. Immediate resistance is at 25,017 and later at 25,243. Nifty remains a Short trade, unless it breaks above 25,169 with volumes. Longs only above that!
• Sensex closed the week at 81,307 Spot. Sensex has immediate support at 81,068 and major support at 80,366. Immediate resistance is at 81,770 and later at 82,472. Sensex remains a short trade, till it breaks above 82,278 with volumes. Longs only above that!

The focus next week will be on the GDP data and the fiscal deficit update; while Jackson Hole outcomes will set the tone for global markets!