The Calm Before the Storm in the Market
Last week, on a closing basis, the initial resistance zone that needed to be breached on the higher side was the 23,786 level, and the support on the downside was at 23,534. The fact that the market strictly closed within these two levels throughout the week indicates that both sides are standing strong and active in the competitive arena, unwilling to yield an inch.
It is worth noting that even though the market swung up to 23,860 and down to 23,317 on an intraday basis, the daily closing for the week was confined to a tight 100-point range between 23,618 and 23,718. We can assume that the market is carefully masking the strong undercurrents that currently exist.
With oil prices remaining above $100, we are now in a situation where petrol and diesel prices are being raised in a phased manner. This trend may continue. Consequently, in the coming days, an inflation-driven “reset” might be reflected in the stock prices of many companies. Anticipating this scenario, it was previously pointed out that there could be a shift in focus from stocks that gained during the declining inflation of the past four to five years to those that could benefit from rising inflation. We must consider that an undercurrent validating this shift is currently unfolding in the market.
Crucial Nifty Levels to Watch
Let us examine the key levels to monitor for Nifty in the coming days:
On the Upside:
If Nifty manages to close above the 23,838 level, it will push the index closer to its immediate target range of 23,988 – 24,278.
Above this, the 24,482 level will act as the first major resistance.
Managing to close above this resistance will be the initial hurdle for the next significant rally. Such a move would pave the way for an upward surge of more than 1,000 points.
On the Downside:
Closing below the 23,658 level in the upcoming days will clearly indicate a waning of bullish strength.
A breach here will open up the possibility for a downward trajectory toward the 23,398 – 23,172 levels.
Key Market Triggers
In the coming days, close attention should be paid to the upcoming GDP data for the previous quarter, along with the IIP data releasing in the new series.
Furthermore, the market’s most significant focus continues to be on a consensus decision in the US-Iran peace talks. How Israel reacts to this development is equally crucial.
Since this month’s futures settlement is also taking place this week, we must infer that the tight rangebound movement seen last week was merely the calm before the storm. Fasten your seat belts.