Last week, the immediate resistance zone seen in Nifty was 24250. It was opined that selling pressure would increase below 24110, and if 23882 is also lost, it would make the bears stronger. The level of 23997 recorded at the beginning of last week was the highest level of the week itself. Later it went down to 23262, and slightly improved its position in the last two days to close at 23643. IT and Banking stocks were the main targets of the bears. While oil prices remain high in the international market, the market is looking with surprise at the fact that diesel and petrol prices were increased only marginally in India. Some prominent analysts point out that the nominal increase of ₹3 is a precursor to a phased increase of ₹8 to ₹11 later. With wholesale price inflation currently standing above 8 percent, some foreign investors also point out the possibility of retail inflation reaching above 6 percent in the next three to 6 months. In such a scenario, the Reserve Bank Monetary Policy meeting early next month assumes greater importance. It is also important whether there will be changes from the situation where interest rates were being reduced. Meanwhile, there are those who raise an eyebrow as to whether the US President’s visit to China last week and the Russian President’s visit this week are just normal trade deal discussions. The possibilities of methods of conquering countries being emulated also remain open.
Coming to Nifty, the situation indicated over the last two weeks still persists. This is a market dominated by bears, so for any upward movements to gain strength, there must be a recovery in some major sectors. For Nifty, which closed at 23643 last week, the first level to cross and close above in the coming days is 23786. Above that, the 23985-24080 levels are also important. The pressure zones already created by bears in the immediate resistance areas of 24284-24482 will also be a headache for the bulls. Now let’s look at the downside levels to watch out for. The 23534 level is the first to be observed; closing below this will take Nifty to the next support of 23262, and if this is also lost, Nifty will rapidly continue its journey to the 22719-22394 levels. The next level to watch out for is 22182, the low of the previous crash. Looking at the situation up to the close of last week, bulls currently have dominance only in the Commodity, Energy, FMCG, Infra, Metal, and Pharma sectors, along with some PSU stocks. The sectors where bears are trying to maintain dominance are Auto, Bank, IT, Consumption, and Real Estate. Capturing at least some of these will be the strategy adopted by both sides to assert dominance in the market. Some of the sectors where bulls are trying to gain a foothold are Pharma, Textile, Chemical, Energy, and Commodity.
While many global markets surged ahead in the last two years, India remained stagnant. The overvaluation from previous years was the problem faced until 2025. Just as that was overcome by profit growth, the next problem to be faced will be inflation. Therefore, the sectors that benefited when interest rates were going down will not be the ones supporting the market to lead it forward anymore. Investors should note that it is time to make the necessary minor adjustments to their portfolios, acknowledging this change. Another thing to note in such a situation is that the frontline companies in all sectors are capable of facing such circumstances, while it is the secondary and small-scale companies that stumble. Similarly, it is the rural economy that usually gets into more trouble.