Regarding the Nifty last week, it was noted that above the 23,814 level, the resistance lines at 24,090, 24,284, and 24,482 would be crucial, and downward support should be observed at the 23,449 level. Nifty, which closed above 23,814 on the very first day of the week and later advanced to 24,189, eventually closed at 24,013. The highlight of the past week was that it was highly eventful, although this was not entirely reflected in the market. The US-Iran conflict reached a consensus, following which Brent crude in the international market dropped from the 88 level down to 76.54. Consequently, the Rupee strengthened, reaching 94.35, marking a week where the Rupee improved by approximately 80 paise.
Last week, the first meeting chaired by the new Fed Chairman Kevin Warsh kept interest rates unchanged but hinted that there could be at least one rate hike this year. This opens up the possibility of more funds flowing out of emerging markets like India. Retail inflation in India increased from 3.48% to 3.93%, marking the fifth consecutive month of rising inflation. A major challenge the market foresees in India is the indication of a severe drought this year. The news that June rainfall is 38% below normal has cast a shadow over the relief brought by lower crude prices. Over the weekend, after the market closed, Israel’s attack on Lebanon further provoked Iran, potentially leading them to a decision to close the Strait of Hormuz once again. Therefore, crude oil will definitely be the center of attention in the coming days.
Returning to the market, the IT sector was the worst performer last week. The fear sparked by Accenture cutting its guidance in the US led to heavy selling in IT. The primary concern is not a revenue collapse, but rather demand visibility for the upcoming year. The best performers last week included Defense, Consumer Durables, Real Estate, and Financial sectors, along with Mid and Small-cap stocks. Let’s look at what to watch out for in the market in the coming days.
As mentioned earlier, Brent crude closed at 80.57 last week. This close came after touching very close to the 75.65 support level. If this support is maintained and it crosses and sustains above the 82.38 resistance level, a move towards the next major resistance zone of 91.15 – 92.35 should be expected. Only if it crosses and sustains above 92.35 can we expect further upward momentum. In such a scenario, Brent crude could surge to the 99 – 112 – 116 levels. A move like this would further weaken India’s economic position.
For Nifty, the first support level to watch in the coming days is 23,817. Closing below this level will open up possibilities for further selling pressure. However, managing to break and close above the 24,123 level would be the first sign of the bulls gaining strength. After that, the bulls will need to conquer the next resistance zone at the 24,284 – 24,482 levels. The subsequent target for such an upward move is the 24,950 level.