The market bulls had a simple toss of the coin to choose from at the start of Monday’s trading session. They chose to play with both.On one hand, they had positive domestic cues in the form of a strong GDP print, robust GST collections in May and anticipation of further monetary easing by the Reserve Bank of India. While a rate cut is a done deal, the debate is the quantum of the cut and trajectory of further rate cuts.
On the other hand were weak global cues. The US and China trading barbs over who violated the temporary tariff truce in Geneva, President Donald Trump doubling tariffs on Aluminium and Steel to 50% and an escalation between Russia and Ukraine in their three-year-long war, which also resulted in a spike in Crude Oil prices.
The market pandered to global cues in the first half of the trading session, with the Nifty falling as much as 220 points. However, the second half of the session saw recovery emerging from lower levels, something that has been a trend over the last couple of weeks.
The bulls managed to defend 24,500 on the downside yet again and this time, they have the Nifty Bank to thank, who in turn has the PSU Banking pack to thank for its outperformance. The PSU Bank index was the top performing index on both Friday and Monday, adding another 2.5% to its tally.However, the PSU Bank index is an underperformer when we take a look at the last one-year returns. Tuesday will mark one year to the Lok Sabha exit polls reaction day when the market had staged a strong rally across the board, led by the PSU stocks. Since June 4 though, the PSU Bank index is up only 5%.To summarise, the Nifty continues to remain stuck in a range between 24,500 – 25,000 and while there remains an overall lack of strength at higher levels, the bulls are ensuring that the index respects key levels on the downside.The underlying trend of the Nifty remains choppy with a weak bias, said Nagaraj Shetti of HDFC Securities. He expects the index to test levels of 24,900 in the next few sessions with immediate support at 24,500.Despite a gap-down start, the Nifty closed above its 20-Day Exponential Moving Average, indicting buying interest at lower levels, said Vatsal Bhuva of LKP Securities. However, the negative divergence in the RSI and a bearish crossover indicate weak momentum. Immediate support is at 24,630, where the 20-DEMA is placed, while positional support is between 24,500 – 24,550 levels. Resistance on the upside is between 24,860 and 25,070 levels.The Nifty Bank continued to outperform led by the PSU banking stocks and has yet again reached its congestion zone between 55,800 and 55,900 levels, closing at the higher end of the range. The index is also trading close to its record highs of 56,098. Over the last 12 months, the Nifty Bank has outperformed the Nifty, gaining nearly 20% during this period.
