Dear patrons, markets staged a superb comeback after a sharp and swift down move ending the week on a high. Indian markets have made it a habit of bouncing back with a greater ferocity after every fall. The latest bounce may be attributed to short covering on account of Nifty weekly expiry.
We did anticipate this up move in our last blog, where we had mentioned, Nifty moving to newer highs once it moves past 25200, and lo and behold it did zoom past 25400 within an hour of going past 25200. You may read it here ((Weekly Market Update: Week Ending 06th September 2024 (amitbajare.blogspot.com))
It was a slow news week for the markets. On the penultimate day of the week the European Central Bank cut interest rates by 25 bps to 3.50%. We had also predicted that all global bankers would start cutting rates ones there is a cut by the Federal Reserve of the US. The EU has gone one step ahead and cut rates as soon as a clear indication of rate cuts in the US came to the fore. Economic growth across the globe has dwindled across sectors and it becomes imperative for bankers worldwide to initiate action on interest rate front.
Domestically for the second time in succession the CPI (Consumer Price Index) stayed below 4% to 3.65%, second best in almost 5 years. The level of CPI is comfortably below RBI's 4% mark. The IIP (Index of Industrial Production) also grew slightly to 4.8% against 4.7% earlier. The numbers are a testimony to India's robust growth despite challenges across the globe. We believe the impending rate cuts should bolster the economic activity in India and provide further impetus to growth. Influx of liquidity owing to rate cuts should reflect in higher allocation to risky assets like stocks resulting in further strengthening of an already bullish market.
Let's now take a look at technicals and try to figure out what lies in store for the coming week.
Nifty has made a new lifetime high last week. We are comfortably placed on most parameters for further up move on Nifty for the coming week. Support for Nifty lies around 25100-25200 range. As long as Nifty remains above 24900, it is a "Buy-On-Dips" market. Nifty is likely to move northwards for the first half of the week. Resistance is placed around 25500-25600 range. News flow after the Fed Interest Rate decision on 18th September will decide further move in the market.
Traders are advised to exercise caution with optimism. The old adage "Buy on rumor, sell on news" may well be kept at the back of the mind. Adhere to strict stop losses on either side. The moves may be wild and volatile. There may a spurt in volatility, particularly in banking stocks. Carrying leveraged position overnight may be risky in the coming week. There may be gap up or gap down opening in the market on multiple occasions.
Investors may look to accumulate certain good quality stocks in every dip.
Stay Invested!!!
“The goal of a successful trader is to make the best trades. Money is secondary.”~ Alexander Elder
P.S.: This communication is for educational purpose only and does not recommend buying or selling any stock or index. Trade at your own risk.
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