Indian markets are outperforming its global peers this year. Last week was especially a stellar one where Nifty and Sensex hit their fresh all-time highs of 17,793 and 59,737, respectively. Meanwhile, Bank Nifty completed its loose end to check its new all-time high. Relief package for the telecom sector, the announcement of a nasty bank, strong FII inflow and large short-covering were key factors for the Indian markets to outperform.
Next week goes to be critical for the Indian market after a recent outperformance because there’s some weakness in global markets where the result of Federal Open Market Committee (FOMC) meeting, which is scheduled on September 21-22 are going to be a critical factor.
There is an opportunity that the US Fed may mention the timeline of bond tapering which might be as early as November which may cause a cautious move within the global equity markets. Some signs of hamper in China also are a explanation for worry especially for the metal sector and most of the metal stocks have began to show weakness from last week. aside from US Fed, the Bank of Japan also will begin with its monetary policy on September 22. Rising Covid-19 cases within the USA and other countries can also disturb the mood of the market
The movement of the Dollar index and US bond yield will play a key role within the behaviour of emerging markets like India. The dollar index is trading near-critical resistance of 93.5 and if it manages to cross this level then we will expect a pointy surge moreover US 10-years bond yields also are giving signs of bottoming out. it’ll be important to ascertain FIIs’ behaviour if there’ll be an increase within the dollar index and bond yields because we’ve seen a robust buying within the previous couple of days by FIIs which is resulting in strong bullish momentum in largecap stocks.
We are during a roaring market and that i believe it’s going to continue for subsequent 2-3 years but after an extended time, i’m sounding a touch cautious as there are some signs which indicate that a short-term correction is round the corner. The Nifty Midcap index is witnessing a reversal from upsloping trendline resistance around 30,500 and Nifty also witnessed some selling pressure near the 17,800-17,850 resistance zone. The sharp rally on Thursday and therefore the half of Friday’s, has taken out many weak shorts within the system whereas weak longs may get trapped at higher levels.
On the downside, 17,430-17,250 may be a critical support zone; below this, we will expect a correction within the market which might be extended towards 16,700 level while if Nifty manages to require out the 17,800-17,850 zone then we will expect it to hit 18,000 mark.
If we mention derivative data then Put Call Ratio (PCR) is at 1.15 level and FIIs’ long exposure within the index future stands at 68 percent which remains indicating comfort within the market but India VIX is showing an upside momentum that would cause volatility within the near term.