Last week, it was pointed out that the resistance level at 24602 and the support levels at 23925-23785 were the key areas to watch, and that significant volatility could be expected within this range. Although steep declines in global markets last week and elevated crude oil prices dragged Nifty into negative territory on several days, the market successfully held onto the psychological support of 24000. Except for Friday, Nifty had come very close to 24000 on all other trading days. On Friday, a rally resembling the start of a strong bull market emerged, with Nifty closing the trade at 24334. Moving on to last week’s major developments, the standout event was the heavy sell-off in AI-related companies across global markets. For over a year, foreign investors had been selling heavily in markets like India to park their funds in these stocks—primarily US companies, closely followed by chip manufacturers in Taiwan, South Korea, and the Netherlands. However, massive selling pressure has been witnessed in these stocks over the past month. As a result, not only has the selling pressure in emerging markets like India started to ease, but prospects for new investments have also begun to emerge.
Among the major economic events influencing the Indian market, a key factor was India’s retail inflation for June surging to an 18-month high of 4.38%. Due to this spike in food prices, the chances of a rate cut in the upcoming RBI meeting have dimmed. Globally, the roughly 12% rise in crude oil prices following US-Iran tensions caused significant market volatility. Nevertheless, the stellar Q1 financial results released by leading companies in the IT and banking sectors provided immense relief to the Indian market. This strong performance attracted investors towards large-cap IT and banking stocks, rescuing the market from a major crash that the crude oil crisis could have triggered. Whether both the IT and Banking indices will continue their positive momentum is the key trend to watch in the coming days. Specifically, the IT index is currently hovering at 29226, right next to its major resistance zone of 29273-29515. If it manages to cross and sustain above this resistance zone, it will signal a strong move towards 36225, though the intermediate resistance levels at 31290-33703 remain important. In Bank Nifty, the movement of private banks like ICICI Bank is what matters now. Having decisively crossed its major resistance levels one by one on Friday, ICICI Bank will certainly be the catalyst for a major move in Bank Nifty. Among frontline stocks, Reliance Industries made an unusual move last week. It remains to be seen whether a new bull trend will begin in this stock.
In the coming days, the resistance levels to watch out for in Nifty are 24397, 24531, and 24571. Above this, the target of 24950 remains open. On the downside, the first support to watch is at the 24198 level. If it fails to hold this on a closing basis, the supports at 23925-23785 will be the lifeline. However, Indian bulls should not expect significant support from global markets, as many major markets are showing signs of correction. If a market decoupling has indeed happened here, a new bull rally awaits us—let’s wait and watch.