Dalal Street Week Ahead: Nifty Analysis For September Second Week

LAST WEEK

NIFTY opened the week with a gap-down on Monday at 17,204 and moved below 17,200 initially. There was a good bounce and the index faced resistance at 17,350. NIFTY consolidated around the resistance till the close.
Tuesday was a remarkable day seeing a huge rally with no previous swing point broken and there was an up-move of nearly 400 points to close above 17,750.

The markets remained shut on Wednesday on account of Ganesh Chaturthi.

Thursday saw a huge gap-down opening owing to the amazing rally on Tuesday and the negativity persisting in the global markets. However, there was an up-move from 17,520 to 17,690 followed by a fall to 17,560.

Friday was a range-bound day after a small gap-up opening. The index closed the day flat and the week also flat, down by just 19 points or 0.11%.

BANK NIFTY opened with a gap-down at 38,200 on Monday and closed higher. 

BNF rallied heavily on Tuesday.

There was a huge gap-down opening on Thursday but bulls came in and BNF even crossed Tuesday’s high. However, there was a sell-off but proper support was taken at 39K. 

Friday was range-bound between 39,200 and 39,500.

IT closed 3.3% lower. The index has broken a major swing point.

Foreign Institutional Investors net bought shares worth Rs 1300 crores last week.

Domestic Institutional Investors net sold shares worth Rs 200 crores.

Though the week was flat, or slightly negative, it is a green candle, which is a good indication. There was proper buying from 17,400.  More interesting than the weekly candle is the monthly candle of August. FIIs might have wanted a bullish close for the month. Tuesday was the last day of August and there was a fantastic rally on the day with every dip getting bought.

The US markets continued the down-move after forming the shooting star in Mid-August. The European markets also closed in the red except for DAX. It was a huge up-move the European markets had on Friday, especially the German markets that has helped DAX close in the green. The reason could be the Russian pipelines resuming gas supply. But the US markets which had opened well on Friday succumbed to selling pressure. Thus, it is not at all a positive tone set for the global markets.

The Asian markets also closed deep in the red. It is a great achievement for our markets to close the week flat when the global markets are swirling in negativity.

Reliance AGM took place on Wednesday and the key points to note are:

Jio 5G  will roll out in major cities by Diwali.

Jio Airfiber, a high-speed hotspot device will be launched.

JioCloud PCs will be launched.

Reliance will bring affordable 5G smartphones by working with Google.

Reliance Retail will launch FMCG Business.

There was no mention of the Jio IPO. It will be discussed during the meeting next year.

India’s GDP grew at 13.5% YoY in the last quarter but this is below the estimates. The Auto Sales data indicated growth but the next month's sales data is crucial as it is festival season. Manufacturing PMI indicated expansion as the figure came out at 56.

Loretta Mester, a Fed official said that it will take much more time for inflation to get back to the range. This added to the negative sentiments.

NVIDIA said that the US government has asked them to stop chip sales in Russia and China. The stock fell heavily. This is a big negative cue for the global markets.

G7 Nations are planning for a price cap on Russian crude oil. As you know, the prices had shot up during the war and Russian exports benefited from it and they could finance the war. Let us watch the crude oil prices.

SGX NIFTY is at 17,511.

INDIA VIX rose to 19.55.

WEEK AHEAD

NIFTY has supports at 17,500, 17,470, 17,400 and 17,345. We can expect resistances at 17,550, 17,615, 17,660 and 17,780.

BANK NIFTY has supports at 39,300, 39,240, 39,000 and 38,800. Resistances are at 39,540, 39,660, 39,760 and 40,000.

NIFTY has the highest call OI build-up at 18,000 followed by 17,800. The highest put OI build-up is at 17,000 followed by 17,500.

BANK NIFTY has the highest call OI build-up at 39,500 and the largest put OI build-up is at 38,000 followed by 39,000.

The markets will first react to the latest developments in the western markets, i.e the up-move in the European markets and the US Jobs data. Jobs report said that 315K jobs have been added last month, which is strong, though less than July. The unemployment rate is at 3.7% against an expected 3.5%. Will the Fed still go for a 75 bps hike is the question now!

17,300 was protected last week and this is a very good sign. We did not have a close below 17,300 though there was movement below the support. The last two days saw price movement within the range of the big green candle formed on Tuesday. 17,780 has to be crossed for the Bulls to stay in the game.

Talking about the important events of the coming week, the US markets will stay shut tomorrow on account of Labour day. Germany’s GDP data will be out on Wednesday at 11 AM and we have the ECB interest rate decision at 5:45 PM on Thursday. China also will release their inflation data on Thursday.

FIIs are building short positions in derivatives. This is a serious concern as it was liquidity infusion by FIIs that helped our markets sail across global negativity.

I will be watching 17,350 on the downside and 17,780 on the upside for the coming week.

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