Dalal Street Week Ahead: Nifty Analysis For September Final Week

LAST WEEK

NIFTY opened the week with a gap-up at 17,898 and moved higher on Monday.

Tuesday saw a gap-up opening above 18,000. Support was taken above 18K.

NIFTY opened with a huge gap-down at 17,791 on Wednesday as the markets were hit by US inflation data. But everyone was surprised by the big up-move and NIFTY even crossed 18K. However, there was selling pressure towards the end.

Expiry day was bearish after a gap-up opening. The index went below 17,800.

NIFTY was extremely bearish on Friday owing to global negativity and the index closed the week at 17,531, down by 302 points or 1.7%.

BANK NIFTY opened with a small gap-up at 40,546 and closed higher on Monday.

There was a gap-up and up-move on Tuesday indicating bullishness.

There came the gap-down on Wednesday but huge buying kicked in and BNF had one of the best days with an up-move of more than 1,000 points from the open.

BNF moved down on Thursday and Friday and closed the week at 40,776, up by 361 points or 0.89%.

IT had a very bearish week, closing 7% in the red.

Foreign Institutional Investors net sold shares worth Rs 1,900 crores last week.

Domestic Institutional Investors also net sold shares worth Rs 2900 crores.

There was bullishness in Indian markets in the first two days but the US inflation report led to a gap-down opening that was huge. Though there was huge buying, the markets decided to react to the global cues and fell from the high.

The US markets have shed all the gains of the previous week. The markets went down by more than 4% and this led to global negativity. The European markets also are down by around 2%. The Asian markets joined the global markets in the negative territory. Note that NASDAQ is nearly 10% down MoM whereas our markets have gained 1% MoM.

NASDAQ moving lower has made a big impact on India’s IT sector. The IT index is nearing the consolidation zone of May 2021.

NIFTY has formed a double top around 18K. The last week was crucial for NIFTY and the bears have won. The day-candle structure does not look good for an up-move. There is a need to close below 17,190 for the bears on a weekly basis.

US Consumer Price Inflation was the highlight of the week. The data was expected around 8.1%. But the real figure was 8.3%. This does not look too bad for such a gloomy scneario we see now. The villain was core CPI that came out at 0.6%, double the expectations. And here is the fall.

India’s CPI was expected at 6.7% but the data again came out at 7% pointing out at the failure of RBI. The next interest rate decision is in the last week of September. Analysts say that there will be a hike of 50 bps.

SGX NIFTY is at 17,870.

INDIA VIX dropped to 17.7.

Other Important Updates

India Industrial output data came out at 2.4% against 4.3%.

UK industrial output data was expected to be a 0.4% rise. Instead, the data indicated a contraction of 0.3%. 

Germany CPI came out at 7.9%, in line with the estimates.

UK unemployment rate came out at a 48 year high.

US Producer price index fell, in line with the estimate.

WEEK AHEAD

NIFTY has supports at 17,500, 17,310 and 17,170. We can expect resistances at 17,600, 17,730 and 17,870.

BANK NIFTY has supports at 40,280, 40,000 and 39,780. Resistances are at 41,150, 41,390 and 41,500.

NIFTY has the highest call OI build-up at 18,000. The highest put OI build-up is at 17,000 followed by 17,500.

BANK NIFTY has the highest call OI build-up at 41,500 and the largest put OI build-up is at 40,000.

We had an eventful week and we will see the reaction by the Fed to the events on Wednesday. We expect a 75 basis points hike. However, a 100 bps hike cannot be ruled out. I think the 75 bps hike is already factored in but 100 bps will be taken seriously by the markets.

Bank of England and Japan also will make the interest rate decision on Thursday.

Japanese markets and London Stock Exchange will remain closed on Monday. Powell will speak on Friday. US Manufacturing PMI also will be released on the same day.

Once again, Fed interest rate decision will have a huge impact on the markets. We have realised the seriousness of the current economic scenario and the choice before the Fed is either to increase by larger points or to take smaller steps but for a longer term.

I will be watching 17,170 on the downside and 18,070 on the upside in a long term view and the immediate levels of 17,300 and 17,800.

Let us know your expectations for the week in the comments section!