The Nifty reached a new record high for the second consecutive day, with 26,373 now marked as the latest peak. However, despite this impressive ascent, the index is facing challenges in maintaining levels above 26,300, a situation attributed to profit booking and underlying concerns. Key Nifty heavyweights, including Reliance Industries and HDFC Bank, saw their upward momentum reverse on Monday. HDFC Bank’s performance was particularly noteworthy, occurring despite a strong business update, and IT stocks also experienced a downturn due to bearish recommendations and downgrades preceding the third-quarter earnings season. Generally, most third-quarter business updates have been robust, with banks like HDFC Bank and Bandhan Bank reporting double-digit loan growth for the second quarter consecutively. Retail and FMCG companies have also presented decent updates for the past quarter.
Despite positive business updates, several concerns loom over the market. Geopolitical tensions, uncertainty surrounding the US-India trade deal, and continued net selling by Foreign Institutional Investors (FIIs) contribute to market apprehension. Furthermore, valuations are a persistent issue, as highlighted by Bernstein’s earlier downgrade of Indian markets. For Tuesday’s trading session, which is also the Nifty weekly expiry, defending the 26,200 support level on the downside is crucial, while sustaining above 26,300 will be key for any upside movement.
Rajesh Bhosale of Angel One identifies the 20-Day Exponential Moving Average (DEMA), which aligns with the session lows of the past two days around 26,100 – 26,070, as critical support zones for the Nifty. On the upside, uncharted territory from 26,400 to 26,500 will act as a resistance. He recommends utilizing any intraday dips as a buying opportunity.
According to Nagaraj Shetti of HDFC Securities, the Nifty is positioned at significant support levels, adhering to the concept of change in polarity. He anticipates a bounce from the 26,200 – 26,150 support levels within the next one to two sessions, with a near-term target set at 26,700.
Featured snippet paragraph: The Nifty Bank index is a key area to monitor following the decline in HDFC Bank, which also impacted other lenders. Despite ending significantly off its highs, the index managed to hold the 60,000 mark. The broader chart structure for Nifty Bank remains positive, with a falling trendline breakout and sustained trading above its short-term 10 and 20-Day Exponential Moving Averages. The RSI also shows a bullish crossover, suggesting potential for further gains.
Positional support for the Nifty Bank is observed at 59,300 levels, with immediate support at 59,700 and resistance at 60,500. Vatsal Bhuva of LKP Securities advocates for a buy-on-dips strategy.
Tuesday’s trading session will also be influenced by business updates from prominent stocks such as Kotak Mahindra Bank, Dabur, IEX, and Utkarsh Small Finance Bank, among others. These updates could provide further direction for the broader market.
Investors are closely watching the performance of banking stocks, especially HDFC Bank, as their movements often dictate the overall sentiment of the Nifty. The bank’s ability to overcome current concerns will be a significant factor in determining the index’s trajectory.
Understanding the interplay between global economic factors, domestic corporate performance, and technical levels is essential for navigating the current market. The upcoming weekly expiry adds another layer of complexity, often leading to increased volatility.
Traders are advised to remain vigilant and adapt their strategies based on evolving market conditions and the release of crucial economic data and corporate announcements.
How to trade Nifty effectively requires a blend of technical analysis and fundamental understanding of market drivers. The current scenario presents both opportunities and risks for traders.
What is the key support level for the Nifty? The key support level for the Nifty is around 26,200, with critical zones identified at 26,100 – 26,070 based on the 20-DEMA and session lows. Defending these levels is crucial for maintaining a positive outlook.
The interplay of these factors will shape the trading landscape for the Nifty in the coming sessions. Staying informed and agile is paramount for success in this dynamic market environment.
Traders will be looking for clear directional cues from the market leaders and the broader economic sentiment. The performance of HDFC Bank in particular will be closely scrutinized.
