Trade Setup for September 9: Nifty bulls continue to lack confidence as IT worries persist

The Nifty extended its upward journey for the fourth straight session on Monday, driven by strong global cues, domestic policy reforms, and encouraging remarks from US President Donald Trump about India. After staying firm for most of the day, the index came under pressure post-2:30 pm, slipping over 100 points from its intraday high of 24,885.Following a sharp recovery from Friday’s lows, the Nifty faced resistance near the 24,900 mark on Monday, triggering profit booking at higher levels.

The index eventually closed with a modest gain of 32 points, or 0.13%, at 24,773.

The broader markets moved in tandem with the benchmarks, with the Nifty Midcap 100 up 0.50% and the Nifty Smallcap 100 higher by 0.16%.Auto heavyweights led the charge, with Tata Motors, Bajaj Auto, M&M, and Eicher Motors lifting the index. On the other hand, Trent, Asian Paints, Coal India, and Dr. Reddy’s were among the major laggards.

On the sectoral front, Nifty Auto outperformed with a strong 3.3% gain after auto makers announced price cuts in response to the GST Council’s decision to reduce vehicle taxes.
In contrast, Nifty IT fell 0.9% amid worries about slower US economic growth, while energy stocks saw profit-taking after last week’s rally. The Nifty India Defence index rebounded 0.5%, ending a two-day losing streak on optimism over the Defence Ministry’s recently unveiled 15-year modernisation plan.Globally, weak US employment data raised expectations of a 25-basis-point rate cut by the Federal Reserve later this month. This optimism lifted commodity prices and aided a 0.4% gain in the Nifty Metal index.

Meanwhile, foreign investors were net sellers in the cash market on Monday, while domestic investors were net buyers.

Looking ahead, investors remain focused on the Fed’s interest rate decision, even as concerns over global trade tensions and softer US GDP data persist. Market sentiment is expected to stay positive, underpinned by GST rate cuts for key sectors and hopes of a Fed rate cut, said Siddhartha Khemka of Motilal Oswal.

Nagaraj Shetti of HDFC Securities said that while the broader trend of Nifty remains positive, the index is encountering resistance around 24,900-25,000 levels. “There could be some more consolidation or minor weakness in the next 1-2 sessions. Immediate support is at 24,620, while a decisive break above 25,000 may trigger fresh buying,” he said.

Nilesh Jain of Centrum Broking said that the Nifty once again failed to sustain above its 100-DMA, currently placed near 24,800. “On the downside, immediate support is seen at 24,710, followed by 24,620. The market remains range-bound within 24,600-24,950 ahead of the weekly expiry. A breakout above 25,000 could fuel a rally towards 25,300 and possibly 25,500,” he added.

According to Nandish Shah of HDFC Securities, the short-term trend has turned positive as the Nifty crossed its 20-day EMA at 24,738. “Resistance is now placed at 24,900, above which sharp short-covering is likely. However, a fall below 24,620 may revive the downtrend and drag the index to 24,500,” Shah said.