Indian equity markets witnessed profit-booking after Nifty crossed 18000 mark and Bank Nifty hit a new all-time high as global cues were not at all supportive. We were showing resilience despite weak global cues but we cannot remain isolated for long. As a result, traders booked some profit over the weekend. Global markets look nervous following US inflation numbers, with the dollar index hovering around 110. The US 10-year bond yield is at a multi-year high of 3.5%, and now everyone is eyeing the outcome of the upcoming US FOMC meeting. Which is on 22nd September. The same day the Bank of England will announce its interest rate decision.
Besides, institutional inflows will play a key role as foreign investors have turned sellers after continuous buying last month. Domestic institutional investors are also showing some reluctance at higher levels.
technically, nifty It is facing resistance near the 18100 level and is forming a kind of double top formation. It has slipped below its 20-DMA which is a sign of caution. On the downside, 17500/17300 are immediate and strong support levels while 17150-17000 is a sacred demand zone on any meaningful correction. 17150 is the previous swing low while 17000 is the 200-DMA for Nifty.
bank nifty Profit booking was witnessed after reaching a new all-time high of 41840 but managed to finish above the 9-DMA of around 40500. If it manages to maintain the 40500 level, it will continue to outperform while if it slips below 40500 then 39700 will be the next important support level.
If we look at the derivatives data, the put-call ratio has slipped to an oversold level of 0.76. Hence there is a possibility of a bounce-back from the 17500-17300 zone. FII short positions in index futures are also at a low of 28%, so we have room for short covering.
Santosh Meena is Head of Research at Swastika Investmart Ltd.
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