Last week, we indicated the possibility of a fall below 23783 towards 23079. Making its stance clear by closing at 23779 on the very first day, the Nifty continued to slide downward each day, reaching 23231 by the end of the week before closing at 23398. The market faced a decline of approximately 2% over the past week. The primary factor affecting the market was crude oil prices surging to $110 in the international market against the backdrop of the Iran conflict. We had observed last week the movement from the 94 level towards the 108–111.25–116 levels, and noted that the 111.25–116 levels would act as heavy pressure zones. Geopolitical issues generally only create temporary crises in the market. Fundamentally, this will not affect companies with excellent cash flows in the long run, and therefore, investors should properly utilize such opportunities.
Looking at the major developments of the past week, inflation remaining close to 4% brings great relief to the Reserve Bank. However, the possibility of an interest rate cut in the upcoming monetary policy meeting is low. The continued strong growth in industrial production sustains the hope that the economy is on the right track. US core inflation was also in line with market expectations. The key event to watch out for in the coming days is the US Fed’s interest rate decision on September 16. On September 18, the UK and Japan will also announce their interest rate decisions. An unexpected rate hike in Japan could have major repercussions, potentially causing capital to be withdrawn from emerging markets. The NSE’s mega IPO opening this week will also drain a significant amount of liquidity from the market. I believe this mega IPO, which has already absorbed a large number of investors in the pre-IPO market, will definitely be a classic case study. The fact that 2,28,000 investors already hold NSE shares is a historic first for a company coming out with an initial public offering. Therefore, I am waiting with the curiosity of a research student to observe this IPO and its subsequent listing.
Now, looking at the Nifty, from last week’s close of 23398, the first downward support to watch is the 23316 level. If this is breached, the next focus should be the strong support zone between 23267 and 23070. As things stand, the likelihood of losing this support is low. A further crash is possible only if this zone is broken. Let’s look at the upside possibilities. First to watch is 23555, above which the 23783 pressure zone is crucial. If it crosses and closes above this, the next major level to watch is 24025. Above this, the 24277–24379–24678 levels will act as major pressure zones for the bulls.