Nifty eyes 18000! 10 factors that could drive action on D-St in coming week
Market would react to the GST meeting outcome on Monday. The GST Council on Friday extended concessional tax rates on COVID-19 medicines, cut tax on cancer drugs and waived GST on import of highly expensive medicines for muscular atrophy, but will continue to keep petrol and diesel out of the uniform national tax regime
The Nifty50 rallied more than 1 percent for the week ended 17 September and closed just a shade below 17,800 levels on Friday.
The index snapped a 3-day winning streak to close in the red as investors preferred to book some profit at higher levels. The next big level to watch out for would be 18000 on the Nifty50.
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The journey for Nifty50 is nothing short of fast and furious. The index has already rallied by more than 25 per cent so far in the year 2021.
“The market selloff on Friday seems mostly on the back of profit booking, following a stellar rally over the last few weeks. Since July 28th, Nifty has gained a whopping 15%. Meanwhile, during this period, the global markets barely moved higher, with the MSCI Emerging Market index advancing 4% and the DJIA being essentially flat,” Abhishek Chinchalkar, CMT Charterholder and Head of Education, FYERS, said.
Given this stellar outperformance, some sort of cool-off or consolidation cannot be ruled out in the short term. That said, the overall trend of Nifty remains up, and corrections, if any, should be used as buying opportunities.
“For the next week, support for Nifty is seen between 17440-17295. If this support zone holds, we could see a retest of today's high and a possible attempt towards 18000,” he said.
We have collated a list of 10 factors that could dictate the trend on D-Street in the coming week:
45th GST Council Meeting Outcome:
The market would react to the GST meeting outcome on Monday. The GST Council on Friday extended concessional tax rates on COVID-19 medicines, cut tax on cancer drugs and waived GST on import of highly expensive medicines for muscular atrophy, but will continue to keep petrol and diesel out of the uniform national tax regime. Read Full Story
US Federal Reserve Meeting:
The market could remain volatile as the US Federal Reserve will kick off the two-day meeting on September 21-22. Global markets will be watching for an update on their bond-buying program, suggest experts.
“In the coming week, the global focus will be on the policy meetings of a few central banks including the Fed. With weak US job data and inflation increasing at a slower pace, Fed is not expected to hint on taper plans in the upcoming meeting,” Vinod Nair, Head of Research at Geojit Financial Services, said.
Bank of Japan meeting:
Apart from the US Federal Reserve, the Bank of Japan will also hold its monetary policy committee on 22nd September. Media reports suggest that the bank is likely to maintain its dovish stance.
Movement of Dollar Index:
The dollar scaled three-week peaks on Friday, supported by better-than-forecast U.S. retail sales data released on Thursday, Reuters data showed. Change in the Dollar index impact rupee.
With the depreciation/appreciation of INR, fund flow in India’s equity market, the profitability of companies in import and export business, dollar-denominated corporate debt, and commodities are all impacted, William O’Niel India said in a report.
The dollar index, a gauge of the greenback's value against six major currencies, rose to 93.220, the highest since the third week of August, showed the Reuters report.
Foreign institutional investors (FIIs) remain net buyers in the cash segment of the Indian equity markets in the week gone by. FIIs poured in more than Rs 7200 cr so far in September compared to over Rs 1400 cr net selloff seen from domestic institutional investors (DIIs).
“The movement of the Dollar index and US bond yield will play a key role in the behavior of emerging markets like India,” Santosh Meena, Head of Research, Swastika Investmart Ltd, said.
Banking Stocks in Focus:
The NiftyBank pared gains after hitting a record high of 38,112. It closed with gains of 0.38 percent at 37,811. For the week, the index closed with gains of over 3 per cent.
Key Pivot points support for the index is placed at 37550, 37211, as well as 37023 while resistance is placed at 38077, 38265, and 38604.
“The index NIFTY Bank has managed to clear the life high of 37,700 in the week gone by. Now, there is a much stronger breakout in the index which hints that it is inching towards higher levels of 40,000,” Mehul Kothari, AVP – Technical Research at AnandRathi, said.
The Nifty50 closed 0.2 percent lower at 17,585 after hitting a record high of 17,792 earlier in the trading session on Friday. For the week, the index closed with a gain of 1.2 per cent.
“On the downside, 17430-17250 is a critical support zone; below this, we can expect a correction in the market and that could be extended towards 16700 levels while if Nifty manages to take out the 17800-17850 zone then we can expect it to hit 18,000 mark,” says Meena.
India VIX moved up by 5.71% from 14.41 to 15.23 levels. Spurt in India VIX may give a volatile swing to the market. It needs to hold below 13 zones to continue the bullish momentum.
"On Option front, Maximum Put OI is at 17000 followed by 17500 strike while maximum Call OI is at 18000 followed by 17800 strike," Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services Limited, said.
"Call writing is seen at 18100 then 17700 strike while Put writing is seen at 17700 then 17600 strike. Option data suggests a broader trading range in between 17300 to 18000 zones while an immediate trading range in between 17400 to 17800 zones," he said.
The rupee closed 4 paise higher at 73.48 against the US dollar on Friday, tracking a broad weakness in the American currency overseas, said a PTI report. On a weekly basis, the rupee gained 2 paise against the American currency.
"Rupee traded in a narrow range near 73.50 as market awaits RBI stance on interest rates. The dollar index stayed range between $92.50-92.75. The range for rupee in the session ahead can be seen between 73.30-73.65," Jateen Trivedi, Senior Research Analyst at LKP Securities, said.
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Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.
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