Last week, it was indicated that the 24154-23750 support levels were highly crucial, and closing below them would be akin to handing Nifty over to the bears. On the upside, 24571 was seen as the first resistance line. Additionally, it was pointed out that the Dollar Index would only open up further upward possibilities if it managed to break past the 99.35 level. The highest level recorded by Nifty in the initial days of last week was 24303, followed by continuous selling pressure, causing it to hit 23112 by Friday before closing at 23151. Brent Crude prices sustaining above $100 and the feeling that an end to the war in Iran is a distant possibility shattered market expectations. Let’s see what can be expected in the market in the coming days.
After witnessing the equity bulls slipping on crude oil, the next danger signal we are seeing is from the dollar. About a year ago, the Dollar Index broke below the 101.43 support and subsequently remained below the 99.39 resistance line for a very long time. Last week, it crossed this 99.39 resistance and currently stands at 100.50. If it manages to cross and close above the 100.90-101.43 resistance zone, it will push the Dollar Index into a bull orbit. The next immediate target is the 104.71 level. From there, it could surge toward higher targets of 109.71-114.7-121.60. The value of the Dollar Index is calculated by comparing the dollar’s strength against six major global currencies: the Euro (57.6%), Yen (13.6%), Pound (11.9%), Canadian Dollar (9.1%), Swedish Krona (4.2%), and Swiss Franc (3.6%). While there could be multiple reasons for the dollar to strengthen, the primary ones are a strong US GDP and the emerging possibility of US interest rate hikes. In either scenario, investments from foreign countries, including India, will start flowing back—either into the US stock market in the first scenario or into US Treasury bonds in the second. Therefore, the movement of the Dollar Index in the coming days becomes extremely important. The US Federal Reserve meeting is scheduled for the coming 17th and 18th. As things stand, it is expected that there will be no change in rates.
Looking at crude oil, which currently stands at 9052, the major supports are at 8347-8291-8081. If these are breached, it can be taken as a sign of crude cooling off. On the upside, a highly crucial resistance line is the 9192 level. If it breaks and sustains a close above this, the 10852-11521 targets will become the primary focus. Later, the rally could extend toward the 16092-16535 levels. However, if it fails to cross and sustain above the major 9192 resistance line, the downward ultimate target for such a correction is seen at 4998, which is a hopeful prospect for us. As far as the Indian economy is concerned, oil prices coming down is of utmost importance.
Coming to Nifty, which closed at 23151, the first resistance line to watch on the higher side in the coming days is 23380. A close above this will lead Nifty to test the strength of the next resistance zones at 23698-24080-24303. Bulls only have any real hope if it sustains above 24303. Now, let’s look at the downside supports. The first support to watch below is 22961. Losing this and closing lower will push Nifty down to the 22634-22254-21964-21914-21743 support levels. As of now, the next major support belt lies in the 21743-22254 zone.