Bulls are taking a breather after a strong bull run but they are still in a mood to take forward the market towards a new milestone as there are no signs of weakness in the Indian markets.
There has been less participation from the institutional, which is leading to some consolidation in the market but in the last week, we saw there is decent buying in many quality midcaps and smallcap stocks beneath the flat headline indices.
Global markets are also in a consolidation mood while Japanese markets are outperforming the developed markets. Global cues will be a key tracker for market behaviour as there are some macroeconomic data are lined up next week like China’s industrial production, US inflation numbers.
China’s industrial production data for August will be announced on 15 September 2021. The US will announce the inflation rate for August 14 September 2021. US Retail Sales for August will be announced on 16 September 2021.
On the domestic front, The Wholesale price index (WPI) inflation for August 2021 is due on 14 September. After a muted or less than expected monsoon in August, the market will eye on September as the monsoon is picking up.
The dollar index is again cooling off after facing resistance at the 92.8 marks and if it continues to fall from here then we can again see FIIs’ buying to pick up which may help headline indices to gain momentum for new highs. Rising covid cases in many countries could be a challenge but the markets are ignoring it as of now because of liquidity and strong economic recovery.
In technical terms of the stock market trading, Nifty is in a strong bullish momentum but it ends last week with a small indecisive Doji candlestick formation.
Last week’s high and low of 17436 and 17254 respectively will be important reference points where if Nifty starts to trade above 17436 levels then we can see levels of 17600/17750 in coming days while a move below 17254 can lead to some short term weakness where 17050/16900 will be the next support levels.
If we talk about bank nifty then it is still underperforming as investors have fintech companies as an alternative investment option to traditional banking business but it may catch up momentum soon.
It is consolidating above its 20-DMA of 36088 where 37000-37250 is an immediate resistance zone; above this, we can expect a move towards the 37700-38000 zone. On the downside, 36000 is strong support; below this, we can expect any weakness towards 35500/35000 levels.
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