Even though the past week consisted of only three trading days, it witnessed intense volatility. The resistance level of 23,047 mentioned last week was never tested; however, the primary support zone of 22,254–21,930 was put to the test.
Market Performance and Correction
Nifty opened with a significant gap-down near 22,549, dropped to 22,283, and managed to close at 22,331. On the following trading day, it opened near 22,941 but closed at 22,679. The next day saw another sharp gap-down, hitting a low of 22,182 before recovering to reach 22,713. Ultimately, the index ended the week with a loss of just 100 points compared to the previous week.
From the all-time high of 26,373 recorded at the start of this quarter (or year), the market has already undergone a correction of 4,200 points, or approximately 16%. Notably, 10% of this decline occurred in March alone. It is significant that the market currently seems to have absorbed most of the negative news emerging from the war fronts.
Economic Factors: The Rupee and RBI’s Intervention
The current selling pressure is largely driven by calculations regarding how crude oil prices, the Rupee, and the Dollar index will impact the economy and corporate performance. Therefore, government policy decisions in the coming days will be a major influence. Recent examples include the waiver of excise duty on petrol and diesel, and the Reserve Bank of India’s (RBI) extraordinary measures to stabilize the Rupee.
The Indian Rupee, which plummeted from 83 to 95 over the past year, has been showing its worst performance. The RBI intervened decisively after identifying that speculative trading was occurring with the tacit support of banks. This led to the Rupee strengthening by over 2% in a single day. While the demand for Dollars is high due to rising crude prices and continuous FII selling, the RBI’s move helps prevent banks from unnecessary Dollar hoarding—though this will likely impact the treasury profits of such banks.
Technical Outlook
Currency and Crude Oil
Indian Rupee (INR): Closed at 93.67. While the previous financial year ended with open targets of 97.86, 99.68, 102.91, and 107.45, current support levels are at 93.31 and 91.20. A sustained stay below 91.20 is necessary to expect a real shift in the Rupee’s current weakness.
Dollar Index: Currently at 99.86. A clear direction will only emerge if it breaks the support at 99.38 or the resistance levels of 100.86–101.43.
Brent Crude: Closed the week at 109.17. Watch for a move above 115.93, as only such a breakout could push the market into a deeper correction.
Nifty 50 Strategy
Nifty closed at 22,713. Being so close to the crucial support levels of 22,254, 21,930, and 21,743, the current environment is favorable for a “bottom formation.” It is vital to monitor trading at these levels closely in the coming days.
- Investors: Short-term investors should look for sectors showing strength, while long-term investors should use this time to rebalance and strengthen their portfolios.
- Recovery: While the first signs of a “bottom out” are visible, they need validation. If the Rupee strengthens and Crude stays below its resistance, Nifty could bounce back toward 23,480, 23,636, and 24,333.
The first resistance to watch in the coming days is 22,941. The key will be whether the index can close and sustain above this level.