Weekly wrap: Nifty and Sensex inch up as DIIs cushion volatility; all eyes on GST impact

The Nifty wrapped up the week at 25,327.05, adding 213.05 points (+0.85%), though the pace of gains moderated compared to the previous two weeks. The index briefly touched a high of 25,448.95 before profit-taking dragged it lower by 96 points in the final session.

Meanwhile, the BSE Sensex ended the week at 82,626.23, marking a modest gain of 729.62 points, or 0.89%, over the past five days. The index demonstrated resilience amid choppy trading, rising from a low of 82,485.92 to touch an intra-week high near 82,978.63. However, the index remains below its 52-week high of 85,978.25, reflecting a measured recovery from recent volatility.

Flows this month highlight a sharp divide. FIIs remained net sellers in the cash market, with outflows of ₹10,572 crore, reflecting caution amid global uncertainties. However, they turned aggressive buyers in derivatives, adding ₹5,470 crore in index futures and a massive ₹80,850 crore in index options, indicating a hedged strategy. In contrast, domestic institutional investors (DIIs) provided a strong counterbalance, pumping in crores of net cash inflows, comfortably absorbing FII selling.

“DIIs extended strong support to the market, pumping in ₹11,177.37 crore during the week. Their sustained buying reflects confidence in the medium to long-term growth story and provides a cushion to the index against bouts of volatility,” said Hariprasad K., a Sebi-registered Research Analyst and Founder, Livelong Wealth. “Foreign institutional investors (FIIs), meanwhile, remained cautious, trimming positions worth ₹1,327.38 crore. However, their pace of selling has slowed compared to the previous week, when FIIs offloaded equities worth ₹3,577 crore, reflecting a more measured, wait-and-watch approach amid global uncertainties.”

“Looking ahead, investors will closely track the rollout of the new two-tier GST structure (5% and 18%) from September 22. Companies adjusting prices under the revised framework could see an uptick in demand and volumes, potentially acting as a near-term catalyst for market sentiment,” added Hariprasad.

According to analysts, the action in the coming week near the 25,500 hurdle will be critical. A decisive close above this zone has the potential to unlock the next leg of the rally, keeping optimism intact among investors. 

“Despite showing strength in the earlier part of the week, the Nifty failed to sustain above the crucial resistance slope near 25,500, facing persistent selling at higher levels. On the weekly chart, the broader uptrend remains intact, but momentum is clearly moderating as the market approaches a major descending trendline that has capped rallies since 2024. Nifty is now at a crucial inflection point near its long-term descending resistance line,” said Ponmudi R., CEO, Enrich Money.

“Investor sentiment has turned cautiously optimistic, with U.S. President Donald Trump’s softer tone on India fuelling expectations of a potential rollback of the additional 25% penal tariffs—a development that could provide near-term support to the rupee and lift investor sentiments,” added Ponmudi.