Global Trends, F&O Expiry Among Key Factors For Markets This Week; Nifty's Support Levels From September 25-29

In the trading week from September 25th to 29th, global trends coupled with F&O expiry, foreign funds flow, and bond yields will be among the key triggers for the Indian market. Indian markets halted their three-consecutive weekly upside to end in a bearish tone during the holiday-shortened trading week that ended on September 22nd. Both Sensex and Nifty 50 dived over 2.5% each, dragged by heavyweights like HDFC Bank and Reliance along with sectoral indices like Realty, Metal and Banks.

Last week, on Friday, the Sensex ended at 66,009.15, down by 221.09 points or 0.33%. While Nifty 50 tumbled by 68.10 points or 0.34% to settle at 19,674.25.

The trading week from September 18th to 22nd was short by 1 day due to the holiday on September 19 the onset of the Ganesh Chaturthi festival across India. That being said, during this week, Sensex declined by 1,829.48 points or 2.69% and Nifty 50 plunged by 518.1 points or 2.56%.

Talking about the weekly performance, Vinod Nair, Head of Research at Geojit Financial Services said, "Throughout the week, investor sentiment was plagued by concerns of impending rate hikes driven by inflationary pressures. Rising crude oil prices, attributed to expectations of increased demand in China coupled with supply cuts, contributed to these inflation concerns. Although the Fed chair opted to maintain existing interest rates, the suggestion of potential future rate hikes in response to inflationary pressures led to rising US bond yields and a stronger US dollar, prompting investors to seek refuge in safe-haven investments. This cast a shadow over the domestic market and displayed a bearish trend. Amid these conditions, PSU bank stocks saw gains, partially due to India's inclusion in JP Morgan's Government Bond Index, which resulted in a decline in bond yields. However, overall, risk-averse sentiment prevailed, driven by the ongoing ascent of US bond yields and concerns regarding the possibility of higher rates persisting for an extended period."

From the trading week set to begin on Monday, JP Morgan's decision to include Indian government securities (GSecs) in its emerging markets bond index with effect from June 2024, will be in focus. Further, investors will bet ahead of the onset of the Q2 earnings season in early October. Apart from this developments between India and Canada will be keenly watched. Additionally, Newjaisa Technologies and JSW Infrastructure will launch their initial public offering (IPOs). Expectations of RBI's upcoming policy will also take the limelight.

Here's what markets experts believe will trigger Indian markets during September 25-29:

Arvinder Singh Nanda, Senior Vice President, of Master Capital Services:

JP Morgan to include Indian government bonds in its emerging market bond index, inclusion will lead to significant inflows into the economy. JP Morgan index is $240 billion and India's weightage will be 10% which will ease borrowing pressure. It is positive for the Banks, NBFCs, and Public Sector Companies.

The India-Canada relationship is deteriorating as both countries have declared the expulsion of each other's diplomats. It becomes important to watch the Investments of the Canadian Pension Plan Investment Board (CIPB) of Rs 1.74 lakh crore in India. It is expected that if this tension further escalates, it can create some pressure.

On the global front, the US Fed Reserve kept the interest rate unchanged despite US weekly jobless claims falling to 8-month low at 201,000, reflecting relative strength in the labour market.

Global and domestic macroeconomic data, trend in global stock market, crude oil prices, global cues, movement of rupee against dollar, Investment by FIIs and DIIs will be in focus. Market will take further cues from some key events such as US Building permits, New Home Sales, API Weekly crude oil, crude oil inventories, jobless claims, US GDP data, UK GDP, Eurozone inflation, India foreign reserves, fiscal deficit.

Bears maintained their dominance in the stock market as benchmark equity indices closed lower for the fourth consecutive session in a highly volatile market on Friday. This decline was primarily driven by the underperformance of stocks in the private banking, financial, pharmaceutical, and IT sectors.

NSE Nifty experienced a decline of 500 points, or -2.57%, in closing values on weekly chart. Given the negative signals on the daily chart, it would be a prudent strategy to consider buy on dip if it comes close to 19500 and sell on rise if it goes to 19900.

Meanwhile, Bank Nifty also fall during the week, closing with a loss of more than 3.50% and break the previous week's low price. It appears to have established a robust demand zone within the 43800-44000 range, making it an opportune area to initiate buying positions price drop to that level. Looking ahead, it's important to note that there is a resistance level expected at 45800-46000, which could pose a challenge for further upward movement in the index.

Santosh Meena, Head of Research, Swastika Investmart Ltd.

Global cues, F&O expiry, and FIIs' flow will dictate the market direction this week.

On the domestic front, there's some positive news: the rupee has stabilized after the announcement of Indian bonds being included in the JP Morgan global bond index. Additionally, a better monsoon and a cool off in crude oil prices are providing support. This week marks the September month Futures and Options (F&O) expiry, which is expected to bring about volatility in the market.

From a technical standpoint, the Nifty is currently undergoing a correction. The range of 19640-19580 is a critical demand zone where a bounceback is anticipated. Below 19580, the 19300-19250 range will be the next important demand zone. On the upside, resistance levels are expected at 19850 and 20000.

Banknifty has experienced a sharp correction with a double top formation at the 46300 level. It is currently trading near the critical support of the 100-day moving average (DMA) at 44500, where a bounceback is anticipated. Below 44500, the 44000-43700 range will be the next support zone. Resistance levels on the upside are anticipated at 45000 and 45500.

In the derivatives market, FIIs' long exposure in index futures has decreased to 47%. The put-call ratio of 0.93 is heading toward the oversold zone, indicating potential market conditions.

Ajit Mishra, SVP - Technical Research

Nifty mostly had time-wise corrections in recent months but it has retraced half of the up move i.e. 19,200-20,200+ this time. Besides, it has also slipped below the short term moving average (20 EMA) and holding below the same. It may result in possible consolidation in the index with the bias on the negative side. We expect Nifty to hold the 19,200-19,550 zone while the 19,900-20,100 zone would attract selling. Meanwhile, since we are still seeing select packs showing resilience, participants should maintain stock-specific approach and maintain positions on both sides.

Disclaimer:

The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.