Nifty concluded Monday’s trading session with a 59-point decline, forming a small negative candle on the daily chart, characterized by minor upper and lower shadows. The index also breached the previous day’s low of 20,129, indicating weakness.
A decisive move below the immediate support at the 10-day Exponential Moving Average (EMA) around 19,940 levels could confirm further weakness in the near term. However, the possibility of sharp selling momentum is limited. The immediate resistance is positioned at 20,220 levels, as analyzed by Nagaraj Shetti of HDFC Securities.
In terms of options, the highest Open Interest (OI) was observed at the 20,200 followed by the 20,300 strike prices on the call side. On the put side, the highest OI was recorded at the 20,000 strike price.
The stock market will remain closed on Tuesday due to the Ganesh Chaturthi festival.
Regarding global markets, the Shanghai Composite index has been one of the worst performers in both the near term and long term. It has remained flat not only for the current year but also over the past 16 years, hovering around the same level as in March 2007. This lackluster long-term performance is due to concerns related to China’s declining population, a slowing economy, political tensions with Western countries, and anti-business economic policies.
The “avoid China” policy adopted by Foreign Portfolio Investors (FPIs) is benefiting India, with increasing outflows from China and inflows into India being clear long-term trends. However, in the short term, India’s high valuations and rising bond yields in the United States pose challenges to this trend.
The Indian rupee had a weak trading session, depreciating by 0.08 rupees to close at 83.23 against the US dollar. This decline was primarily driven by the rising crude oil prices, which exerted downward pressure on the rupee. Sustained high crude oil prices can raise concerns about the import bill and potentially worsen inflationary pressures, which are already a global concern.
The US Dollar Index has maintained a bullish trend, continuing from the previous month, rallying from 103.50 to 105 in September. This sustained strength in the US dollar has significantly contributed to the rupee’s weakness.
Market participants are now turning their attention to the Federal Reserve’s interest rate decision scheduled for Wednesday. While there is an expectation that there will be no rate hike this time, the Federal Reserve’s statement and stance will play a crucial role in determining the dollar’s trend. The expected trading range for the rupee is between 83.05 and 83.45.
