Last week, the major levels seen in Nifty were a resistance line on the higher side at 24616, with an initial support at 24498 and the next support at 24277 on the lower side. On Monday, the first day of the week, it reached up to 24620 at one point but failed to maintain the closing level. Later on Tuesday, following crude oil reaching the 90 level, Nifty faced a decline and reached 24471. Afterwards, a sideways movement was witnessed in the market during the subsequent days. Nifty, which went down to 24265, ended the week’s trading at 24366. The highlight of last week was that although our observed resistance and support zones were tested, the market held its ground and sustained them. We also saw foreign investors’ selling relatively decrease, turning into net buying. India’s Consumer Price Index (CPI) rate showed a slight increase to 4.45%, which is primarily considered to be a change driven by the rise in oil prices. Apart from the fact that it has been steadily rising from 3.93% last May to 4.38% in June and now to 4.45%, it can be said that this does not cause major concern. It should also be noted that a further rise will shatter hopes of a reduction in bank interest rates. In the US, the Consumer Price Index data that came out last week stands at 3.4%, while 3.6% was expected, thereby increasing expectations for a future rate cut. However, the 10-year and 30-year bond yields continuing to stay high is creating concern. For developing nations including India, an increase in US interest rates could lead to a reduction in capital inflows here. Therefore, it is a development that needs to be watched closely.
Last week in India, N. Chandrasekaran expressing his readiness to resign from the position of Tata Sons Chairman caused heavy selling pressure in Tata stocks. Noel Tata’s dissatisfaction over mounting losses in Air India, Tata Digital, and Tata Play is the reason that led to this resignation. A board meeting to find a replacement for Chandrasekaran, whose term ends next February, will be held on the upcoming 18th. The shifting winds in the Tata Group, which has 30 frontline listed companies, are capable of creating ripples in the market, making this another key subject to watch in the coming days. Whether the renewed interest in defense stocks continues is another aspect to watch in the upcoming days. Last week, gold per ounce crossed a very crucial resistance line of 4422 dollars and closed above it for two days, but the closing in the last three days was below 4422.
On August 21, the HSBC Manufacturing & Services PMI figures will be released. If the manufacturing PMI drops below 55, it will have to be taken as a negative signal. The Services PMI will also provide an indication as to whether India’s growth engine is moving in the right direction. Other things to watch out for in the coming days will be the Hormuz reopening and Brent crude prices sustaining below 85. Although Brent reached very close to the resistance zone of 90.23-91.15 that we saw last week at one point, it could not cross it and has closed the week at the 88.59 level. Brent will pose a greater danger only if it manages to cross the aforementioned upper resistance zone. If it closes below 82.38 on the lower side, Brent will enter a further breakdown. Generally, staying below 85 is evaluated as a relief for India.
If we examine the possibilities for Nifty in the coming days, the support at 24278 will be the most important one to watch. Closing and sustaining below this will not provide a very favorable signal. The subsequent supports to watch out for are 24024, 23823, and 23783; in a scenario where it closes below 23783, the levels of 23606 and 23172 will become crucial. Since Nifty is still maintaining a bullish possibility, the first resistance line to watch in the coming days will be at 24415. If it manages to cross the further resistance lines of 24677 and 24773 above that, it will set the stage for the next rally. The 25476 level will be the next one to watch out for. Looking at the sectors, Pharma, Realty, Auto, Media, and Consumption continue to remain strong, while the Service sector and IT are attempting to advance. Bank Nifty continues to be in a corrective phase within the 56000-59000 band.