The Nifty50 rose over 1% for the week ended September 17 and closed just a little below 17,800 levels on Friday.
The index ended a 3-day winning streak to close in the red as investors preferred to post profits at higher levels. The next big level to watch out for would be 18,000 on the Nifty50.
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The trip for Nifty50 is just fast and furious. The index has already risen by more than 25% so far in 2021.
âThe market’s massive sell-off on Friday appears to be primarily due to profit reservation, after a stellar rally in recent weeks. Since July 28, Nifty has gained 15%. Meanwhile, during this period, global markets barely increased as the MSCI Emerging Markets Index rose 4% and the DJIA was essentially stable, âsaid Abhishek Chinchalkar, CMT Charterholder and Head of Education, FYERS.
In view of this meteoric outperformance, a sort of cool-off or consolidation cannot be ruled out in the short term. That said, the overall trend for Nifty remains upward and corrections, if any, should be used as buying opportunities.
âFor the next week, support for Nifty is seen between 17440-17295. If this support zone holds, we could see another test of today’s high and a possible attempt around 18,000, âhe said.
We’ve put together a list of 10 factors that could drive the trend on D-Street over the coming week:
Outcome of the 45th GST Council Meeting:
The market would react to the results of the GST meeting on Monday. The GST Council on Friday extended preferential tax rates on COVID-19 drugs, reduced the tax on cancer drugs, and removed the GST on the importation of high-cost muscle atrophy drugs, but will continue to exclude gasoline and diesel from the uniform national tax system. Read the full story
US Federal Reserve Meeting:
The market could remain volatile as the US Federal Reserve kicks off the two-day meeting on September 21-22. Global markets will await an update on their bond buying program, experts suggest.
âIn the coming week, the global focus will be on the political meetings of a few central banks, including the Fed. With weak employment data in the United States and inflation rising at a slower pace, the Fed should not be hinting at any cuts at the next meeting, âsaid Vinod Nair, manager. of research at Geojit Financial Services.
Bank of Japan Meeting:
In addition to the US Federal Reserve, the Bank of Japan will also hold its monetary policy committee on September 22. Media reports suggest the bank is likely to maintain its accommodative stance.
Movement of the dollar index:
The dollar hit three-week highs on Friday, supported by better-than-expected US retail sales data released on Thursday, according to Reuters data. The change in the dollar index has an impact on the rupee.
With the depreciation / appreciation of the INR, the flow of funds in the Indian stock market, the profitability of import and export companies, corporate debt denominated in dollars and commodities are all affected, said William O’Niel India in a report.
The dollar index, an indicator of the greenback’s value against six major currencies, hit 93.220, the highest since the third week of August, according to the Reuters report.
Foreign Institutional Investors (FIIs) have remained net buyers in the cash segment of Indian equity markets over the past week. The IFIs have paid out over Rs 7,200 cr so far in September, against more than Rs 1,400 cr in net sales from national institutional investors (DII).
âThe movement of the dollar index and US bond yield will play a key role in the behavior of emerging markets like India,â said Santosh Meena, head of research, Swastika Investmart Ltd.
Focus on bank stocks:
NiftyBank slashed gains after hitting a record 38,112. It closed with gains of 0.38% at 37,811. For the week, the index closed with gains of over 3 percent.
Support for the index’s key pivot points is placed at 37550, 37211, as well as 37023 while resistance is placed at 38077, 38265 and 38604.
âThe NIFTY Bank Index has managed to break through the highest living standard of 37,700 in the past week. Now there is a much stronger breakout in the index hinting that it is approaching the higher levels of 40,000, âsaid Mehul Kothari, AVP – Technical Research at AnandRathi.
The Nifty50 closed 0.2% lower at 17,585 after hitting a record 17,792 earlier in Friday’s trading session. For the week, the index closed with a gain of 1.2 percent.
âIn contrast, 17430-17250 is a critical support area; below that we can expect a market correction and that could extend to the 16700 levels while if Nifty manages to break out the 17800-17850 area we can expect it to hit the 18,000 mark Meena said.
India VIX rose 5.71% from 14.41 to 15.23 levels. The India VIX push may give the market a volatile swing. It must stay below 13 zones to continue its bullish momentum.
“On the options front, the maximum OI Put is at 17000 followed by 17500 strike while the maximum OI Call is at 18000 followed by 17800 strike”, Chandan Taparia, vice-president | Analyst-Derivatives at Motilal Oswal Financial Services Limited, said.
“The call entry is seen at 18100 then 17700 strike while the Put entry is seen at 17700 then 17600 strike. The options data suggests a wider trading range between 17300 and 18000 zones while a range immediate negotiation between 17,400 and 17,800 zones, âhe said.
The rupee closed up 4 peas at 73.48 against the US dollar on Friday, reflecting broad weakness in the US currency abroad, according to a report from the PTI. On a weekly basis, the rupee gained 2 paise against the US currency.
The rupee traded in a narrow range near 73.50 as the market waits for the RBI’s position on interest rates. The dollar index remained in a range between 92.50 and 92 . $ 75. The rupee range in the coming session can be seen between 73.30 and 73.65, “Jateen Trivedi, Senior Research Analyst at LKP Securities, said.
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Disclaimer: The opinions / suggestions / advice expressed here in this article are solely by investment experts. Zee Business suggests that its readers consult their investment advisers before making any financial decisions.