It was indicated last week that a close above the 23838 level would bring Nifty closer to the resistance zone of 23988 – 24278, and upon breaking this, the 24482 level would be the one to watch, while on the downside, the 23658 – 23398 supports would need attention. Even though the market bounced back very strongly with an increase of over 300 points on the very first day of last week, Nifty was not only unable to cross beyond the 24090 level recorded in the initial days, but it also faced heavy selling pressure down to 23484 on the final trading day, eventually closing the trade at 23547. The only thing providing some solace to the bulls is the fact that the selling pressure on Friday was due to MSCI rebalancing. Technically, it must be said that facing selling pressure without being able to overcome the resistance zone at higher levels, especially the 24284-24482 level, is not a very good sign. If the bulls fail to create any movement in the two strategically important sectors of Banking and IT in the coming days, they will have to pay a heavy price for it. Among these, Banking was recently snatched away from the bulls by the bears, while IT has been held by them for a long time. The bulls are making fairly good efforts to reclaim the IT index. At the very least, what is needed in the coming days is to cross and close above the highly crucial resistance zone of 29343 and sustain above it. If the Nifty IT index, currently at the 29080 level, manages such a close, it will not only trigger a leap towards the 31600-32650-33703-36225 levels but also act as a massive, comforting support for Nifty. Regarding Bank Nifty, the closest support to watch is the 52836 level, and on the upside, 56475 is the first resistance zone that needs to be broken to advance. All this was mentioned just to be aware of the positions that the two major indices, which have the potential to influence Nifty in some way, need to take. Now, let’s examine Nifty itself.
As mentioned earlier, Nifty closed last week at the 23547 level. The first resistance line to watch on the upside is at 23893. If it manages to close above this, it can be assumed that it has recovered from the heavy selling that occurred on Friday. The next thing to watch out for will be the very important resistance zone of 24284-24482. The significance of this lies in the fact that even if any possibilities are to open up for the bulls, it will only be possible above this level. Now let’s look at the downside possibilities. The support at the 23262 level is the closest major support. Losing this and closing below it would be an indication of leading the market into the next wave of selling pressure. The nearest support at the 22930-22720 level will then be tested. Below this, the support at the 22400-22182 levels may also be tested.
Although Gold breached the 4422 support once last week, it managed to sustain above it on a closing basis. This 4422 support will remain the key level to watch for Gold in the coming days; if it ends up closing below this, it could be a sign of heavier selling building up. Silver closed last week at 76.17. The movement above the resistance line of 77.74 and below the support of 75.24 will help determine Silver’s near-term trend. The Dollar Index closed at 98.85 last week. The resistance lines of 99.33-99.57 are what the Dollar Index needs to overcome next. The Rupee was seen strengthening to 95.26 last week; as long as the 95.68 resistance line is not crossed, the Rupee has opened up possibilities to strengthen further downwards to the 93.87 – 93.10 levels. Brent Crude made a weekly close at 91.12 last week, just below the very crucial support of 91.15. If it fails to break back above and close higher, it opens up the possibilities for crude to reach the 82.38-75.50 supports. In short, the conditions ahead appear favorable for the bulls. However, since surprising us is always the market’s habit, let us wait for the next move.