US Fed, rupee, crude price to set tone
Nifty trading range could be 10750-11330 with key support level at 10750 and 10850
With the last week move, it seems magic of Nifty rally is fading away in September. In the last short week, Nifty closed negative for the third consecutive week with a deep cut of 3.23% week on week and closed at 11143. The carnage was more severe in the mid and small cap indices as they lost 5.37% and 6.58% respectively.
The Bank Nifty eroded a hefty 5.77% led by the selling all over in the Banking and NBFC space. All the sectoral indices ended in the red. The PSU Banks lost 8.46% with Bank of Baroda losing 17% as the government proposed a merger of three banks preparing the ground for consolidation among the PSU Banks. Private banks lost 6%, Auto by 3.87% and Pharma lost by 3.76%. Energy and Metals sections also lost 1.37% and 1.10% respectively. The FIIs sold equities worth Rs 1,471 crore and the DIIs bought shares of Rs 1,782 crore.
In the last week, markets opened with a negative bias. The rupee also touched to a new historical low of 72.98.
In the key global events this week, the US Fed meeting on interest rate decision will be on Wednesday while the US 2Q final GDP data will be released on Thursday. India’s April to August fiscal deficit, August month infrastructure output and Q1’19 external debt data will be announced on Friday.
Last week markets faced extreme volatility fearful sell-off across the stocks and Nifty swung in a wider range of 11465 and 10866 after a very long time. Technically, last week low of 10866 is key support as it is 50% retracement level of the entire rally from 9950 to 11760 and nearing to its 200 DMA at 10750 which is again key support level in other words breach of this level can be a strong trend decider. With September F&O series expiry this week, the market will remain more volatile. This week, trading could be 10750 to 11330 with key support at 10750 and 10850 while resistance at 11000 and 11180. Key focus on oil marketing companies, NBFC, Housing Finance, IT and Pharma sector.
VOLATILITY AHEAD
- Technically, last week low of 10866 is key support as it is 50% retracement level of entire rally from 9950-11760
- With September F&O series expiry this week, the market will remain more volatile; OMC, Pharma, IT, NBFC sectors to remain in focus
The writer is VP- Retail Research, Motilal Oswal Financial Services