Weekly Trade Guide: What Will Be The Support Level Of Nifty, Bank Nifty? Key Factors Here

Markets are trading bullish on Monday with Sensex and Nifty 50 rising by nearly a percent. However, Nifty has been flirting with the 20,000 support level by touching an intraday high of 19,946.45. It is expected that bulls will eye for a 20,000 mark in Nifty while ignoring the cautious global trends. Not just that Bank Nifty is expected to race for 46,000 levels in the current trading week. Both these NSE indices display a robust performance in recent times. Traders will pay attention to the CPI inflation data in India and the US due this week as it will paint a further picture of the rate hikes scenario by the central banks.

Monday's Market Performance:

On Monday, the continuation of the markets positive mood was triggered by the G20 Delhi Declaration and India's diplomatic triumph. Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services said, "More importantly, the inclusion of the African Union in G20 and the proposed India-Middle East-Europe Corridor have positive economic and market connotations."

Vijayakumar added, "In the present favourable market mood Nifty is likely to make another attempt at a new record high trying to conquer the psychological market of 20000. But investors have to be cautious since fundamentals do not support a sustained rise above 20000. Large FII selling may re-emerge at higher levels. The market is ignoring worries arising out of crude at $90. Some profit booking in small-caps is advisable. Now, safety is in quality large-caps."

At the time of writing, Nifty 50 traded at 19,936.60, up by 116.65 points or 0.59%, after hitting an intraday high of 19,946.45. While Bank Nifty surged by 234.20 points or 0.52% to trade at 45,390.60 after touching an intraday high of 45,441.55.

Meanwhile, Sensex rallied by 353.78 points or 0.53% to trade at 66,952.69. Further, bullish spillovers have led midcap and smallcap extended their record high levels on BSE to 32,987.11 and 38,603.18 respectively. Auto, banking, consumer durables, metal and IT stocks were top performers.

In the trading week from September 4th to 8th, Sensex gained by 1,109.01 points or 1.7% and Nifty 50 soared by 306.05 points or 1.6%.

Key Factors To Drive Markets This Week:

Arvinder Singh Nanda, Senior Vice President, of Master Capital Services Ltd said, "Benchmark Indices logged their best week in the last two months after rising for six consecutive sessions on Friday. Sectoral Indices advanced for the second time this week led by the realty, media and metal sectors."

He highlighted that India's S&P global services PMI fell to 60.1 in August from 13 13-year high of 62.3 in July but still recorded one of the best sales performances despite elevated inflationary pressures. However, exports hit a record high on robust foreign demand. Also, Indian Automobile retail sales were up by 9% YoY in August with growth across all segments at 18.18 lk units. We expect the automobile industry to post good growth in sales in September on the onset of the festive season and improved liquidity.

Further, Santosh Meena, Head of Research, Swastika Investmart Ltd said, "Despite the US 10-year bond yield surpassing 4.3%, the dollar index reaching above 50, and Brent crude trading at over $90, the Indian market has displayed remarkable resilience. Bullish sentiment is strong, with hopes of the Nifty reaching the 20,000 mark this week. The standout performer last week was the Nifty PSE index, which experienced its best week in years. The broader market is also in high spirits, as the Nifty midcap and small-cap indices have posted substantial gains for the third consecutive week."

However, Meena also stated that caution is warranted in the broader market, as signs of frothiness are becoming apparent in certain segments. Despite last week's market rally, institutional investors remained net sellers throughout the week, making it crucial to monitor institutional flows going forward.

On the global front, Nanda said, the US trade deficit in July grew to $65bn in July on a rise in imports from $63.7bn in June. US August S&P global services PMI rose to 54.5 vs 52.7 in July due to new orders firming and businesses paying higher prices for inputs - showing potential signs of elevated inflation pressures. He pointed out that crude oil price traded at a 10-month high of $90 per barrel up 7%, with supply cuts announced by OPEC, Saudi Arabia and Russia.

"It is expected that in the coming days, a stronger dollar could exert upward pressure on crude prices, potentially offsetting gains made from supply cuts and increased demand," Nanda added.

Also, Meena said, close attention will be paid to movements in crude oil prices, the dollar index, and US bond yields. Additionally, global factors such as the US inflation rate and the outcome of the ECB meeting will be of significance. Domestically, developments stemming from the G20 summit may lead to sector- or stock-specific movements. Furthermore, it is worth noting that our IIP and CPI numbers are scheduled to be announced on September 12.

On the macro front, as per Nanda, the market will react to some of the key domestic events such as India's CPI and WPI inflation, IIP numbers, manufacturing output, Forex reserve and trade balance data. Major global events that can impact the market are US consumer inflation and core inflation, Initial jobless claims, Industrial production, crude oil inventories, UK GDP and IIP numbers would be in focus.

Nifty Support Level:

As per Nanda, the Nifty index has shown strong performance recently, with a nearly 2% gain, finding solid support at the 19200 level. Currently, prices are trading above the 21-day EMA on the daily chart, indicating positive momentum. There's a strong likelihood that Nifty will break its all-time high in the upcoming weeks of September. The immediate support level now stands at 19650, while 19900 serves as an immediate resistance.

Somewhat similarly, Meena said, from a technical perspective, the Nifty has recently broken out of a bullish flag formation, suggesting the potential for a significant upward move. However, it faces a critical psychological hurdle at the 20,000 mark, which currently acts as a key resistance level. If Nifty struggles to breach this level, there's a possibility of it forming a double top pattern around this point, which could trigger profit booking. On the downside, the range of 19,600-19,500 is a robust demand zone, providing support.

Meanwhile, Ajit Mishra, SVP - Technical Research, Religare Broking also said, with a trend line breakout combined with a decisive close above 19,650, the Nifty index looks set to inch towards a newer high. It may take a breather around the milestone of "20,000" and then progress to 20,300 level. On the downside, the 19,500-19,650 zone would offer the cushion, in case of any profit taking. Since all sectors are contributing to the up move, maintain focus on identifying stocks, that are showing relatively higher strength and avoid contrarian trades.

Bank Nifty Support Level:

Turning to Bank Nifty, Nanda said, the weekly chart displays a robust performance, closing above the high of the preceding four weeks and rising by more than 1.5%. On the daily chart, it has broken out convincingly above the 45000 level. Looking ahead, the initial resistance levels can be found at 45800-46000.

Meena added, it has displayed a strong recovery from its 100-day moving average (DMA). The immediate resistance zone for Banknifty is around 45,600-45,700, and surpassing this level may pave the way for an attempt to reach the all-time high of 46,350. On the downside, the key support level is at 44,400.

Derivatives Market:

According to Meena, in the derivatives market, it's noteworthy that FIIs (foreign institutional investors) hold a long exposure in index futures at 58%, indicating a neutral to bullish bias.

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.