Whalesbook
Nifty Reaches New Peak Amidst Volatility
The Nifty index carved out a fresh record high at 26,373 early in the week. However, sustaining these gains proved challenging, with profit booking and underlying market concerns preventing a firm hold above the 26,300 mark. The index concluded the session struggling to maintain its upward momentum.
Heavyweights Drag Index Down
Key Nifty components reversed course, impacting the broader market. Reliance Industries, after reaching its own record, saw a pullback. HDFC Bank, despite a robust business update, also retreated. IT stocks faced pressure amid bearish recommendations ahead of the third-quarter results season, adding to the list of market detractors.
Q3 Business Updates Mostly Robust
Barring a few exceptions, most third-quarter business updates have painted a positive picture. Banks, including HDFC Bank and Bandhan Bank, reported double-digit loan growth for the second consecutive quarter. Retail and fast-moving consumer goods (FMCG) companies also posted encouraging updates for the recently concluded quarter.
Geopolitical and Valuation Headwinds
Persistent concerns continue to influence market sentiment. Geopolitical tensions, uncertainty surrounding the US-India trade deal, and ongoing net selling by foreign institutional investors (FIIs) add layers of caution. Elevated valuations, previously cited by Bernstein for downgrading Indian markets, remain a factor for investors to consider.
Technical Outlook for Nifty
Ahead of Tuesday's weekly expiry, traders will be closely watching the 26,200 level as a crucial downside support. Holding above 26,300 will be key for any upside continuation. Analysts suggest 26,100-26,070 as significant support zones, coinciding with the 20-day Exponential Moving Average (20-DEMA) and recent session lows.
Rajesh Bhosale of Angel One advised utilizing intraday dips as buying opportunities. Nagaraj Shetti of HDFC Securities sees the Nifty at critical support levels and expects a bounce towards 26,700 in the near term, citing the concept of change in polarity.
Bank Nifty Under Scrutiny
The Nifty Bank index warrants close monitoring, particularly following the decline in HDFC Bank shares, which pulled other lenders lower, with the exception of CSB Bank. The index shed nearly 400 points from its intraday high but managed to defend the 60,000 mark.
Technical indicators for the Nifty Bank remain constructive. The index has broken a falling trendline and is trading above its short-term 10 and 20-day EMAs. The Relative Strength Index (RSI) also shows a bullish crossover, according to Vatsal Bhuva of LKP Securities. A buy-on-dips strategy is recommended, with immediate support at 59,700 and resistance at 60,500. Positional support is seen at 59,300.
Upcoming Corporate Actions
Tuesday's trading session will also involve market reactions to business updates from companies such as Kotak Mahindra Bank, Dabur, IEX, and Utkarsh Small Finance Bank.