As indicated last week, if the final traded level that closed above 23783 could sustain in the first hour on Monday, and later manage to close above 23906, it would be a sign of a comeback, and if the 24268-24367 levels were also crossed, it would open the possibility for a strong move by the bulls, while the first support to be maintained on the downside was seen at the 23667 level. Monday opened with a good gap-up itself, 23891 was the lowest level recorded that day, and it closed at 23995. Later, it continuously moved forward, uprooting every resistance line to advance up to 24429, and closed at 24383. In the meantime, even though the Iran-US war intensified and oil prices increased in the international market, the Indian market held on in an excellent manner. Indications that foreign investors have started believing that India’s growth engine is working excellently were also seen in the market last week. Even though the US Fed kept interest rates unchanged, a strict stance (Hawkish) has been adopted in monetary policy. The market is evaluating the possibility of a rate hike from September. US bond yields are at their highest level since 2007. This can adversely affect the flow of foreign funds to emerging markets and the value of the Indian rupee.
It is worth pointing out that the Nifty showed a better closing in this adverse situation for the second consecutive month. Significant changes in sectors are happening in the market. Pharma, real estate, and media are the sectors currently continuing a strong advance in the market. Investors should specially note the strong comeback being made by the IT sector after a prolonged period of exhaustion. The consumption sector and banking are also improving. However, since the speed of the surge in sectors like metal, energy, and infrastructure that performed excellently earlier has now slightly reduced, a disciplined investment approach should be continued in these stocks. Since sectors like FMCG and the public sector are still under severe pressure, it is appropriate to stand with more caution until a clear trend change becomes visible in them. The most crucial event in the coming week will be the RBI monetary policy announcement coming out around August 6; although it is expected that the repo rate will be maintained unchanged at 5.25%, the central bank’s guidelines regarding inflation and economic growth will determine the trajectory of rate-sensitive stocks. In addition to this, HSBC PMI data, the US employment report, and the ongoing first-quarter financial results are also important factors to be noted.
Now let us examine the levels to be watched in Nifty in the coming days. On the higher level, the first thing to watch is whether it is able to close above the 24438 level. If that becomes possible, the main resistance lines to be noted are 24529-24601-24760-24854. As each of these is breached, the bulls will keep becoming stronger. Now let us examine the supports to be noted on the downside. 24295 is the first support to be noted on a closing basis. If this happens to be lost, the support zones to be noted later are 23954-23763-23606 respectively. Each of these is important concerning the trends in Nifty in the coming days. The bulls are indeed making their move with great caution this time in Nifty. The fact that private banking and IT sectors have started waking up will definitely give wings to the dreams of the bulls.