How do you see the stock market trend evolving on Friday 05th August 2022?

On Thursday, the Nifty was highly volatile through the day and after all the volatility, it closedly marginally lower by about 6 points. The breadth of market as indicated by the advance decline ratio or the A/D ratio was also marginally unfavourable at 23:27. Pharma and healthcare stocks were in the positive for the day on defensive buying.

After a brief show of strength earlier in the week, the Indian rupee weakened further to 79.50/$ mark. There are fears of the rising trading deficit which has already scaled up to $100 billion in the first four months of the fiscal. In addition, there is also the sense of caution ahead of the RBI policy announcement on Friday. INR could be under pressure.

Foreign investors net bought equities worth Rs1,474 crore while domestic funds and LIC sold Rs.47 crore of stocks on Thursday. FPI buying appears to be sustaining in August also. In global markets, Dow lost 86 points while NASDAQ was up 52 points on Thursday. While Europe was in the green, SGX Nifty is trading 30 bps higher in early trades on Friday.

In terms of outlook for Friday, it would predicate on whether the RBI gets too hawkish or holds on to its guns in the policy statement. The focus will be a lot more on the the inflation projections of the RBI. There could be caution ahead of the week end and a slew of holidays coming up in the next two weeks. Markets are likely to face traders lightening positions.