NIFTY TO FIND ITS SUPPORT AT 24500 “NIFTY IT” TO RESTART UPSIDE MOMENTUM FROM 41500

Dated: 07/09/2024

As we passed another week Nifty tested another ATH towards 25333.65 but the exhaustion last week came from near our previously mentioned levels of 25550. The 500 points & more profit booking came & now Nifty to find its crucial support now near to 24500 kind of level. With muted to positive opening of Nifty last week bears eventually caught up & the profit booking came which took Nifty towards 24800. This cool off could take Nifty towards 24500 & this could also act as a crucial level for reversal.

Nifty may resume its bullish momentum from level of 25200 which could once again be supported not only by “Nifty IT” but also by heavy weights like; Reliance , HDFC Bank etc. The coming week could take time to reverse the grip from hands of bears to bulls which may eventually end up winning & take the Nifty once again towards 25000 kind of levels.

In the wholesome broader markets witnessed some key events & their outcomes last week which are described as follows:

1. Total Collections: GST revenue for August 2024 stood at ₹1.74 lakh crore, showing a 10% increase compared to August 2023.

2. Breakdown:

   • Central GST (CGST): ₹30,862 crore.

   • State GST (SGST): ₹38,411 crore.

   • Integrated GST (IGST): ₹93,621 crore, which includes imports and inter-state sales.

3. Cess Collection: Cess on items like automobiles and tobacco contributed ₹12,068 crore.

4. Year-to-Date Performance: Cumulative GST collections for the fiscal year have reached ₹9.14 lakh crore, up 10.1% from the previous year.

5. Economic Indicators: This growth reflects strong domestic consumption, an increase in imports, and improved tax compliance.

6. Future Outlook: Experts predict continued growth during the festive season, with GST revenues likely surpassing targets.

International

US Federal Reserve: Continued discussions around tight US monetary policy influenced markets globally. However, a more dovish tone from Fed Chair Jerome Powell at Jackson Hole and a significant reduction in previously reported US job numbers led to a positive shift in sentiment. The revision suggested that the labour market was weaker than initially thought, encouraging expectations of a potential pause or slowdown in rate hikes.

Equity Markets:

1. The MSCI World Index gained 2.51%, with sectors like healthcare (+5.39%) and consumer staples (+5.19%) leading the performance. Energy, however, underperformed, declining by 1.4%.

2. In Europe, stocks rose, with the MSCI Euro Index up 4.04%, despite ongoing political uncertainty in France.

3. Currency Movements: The Japanese yen saw some volatility, with the dollar recovering against it after recent declines. The British pound remained strong against the US dollar, but corrective pressures were expected.

4. AI and Tech: AI-driven sectors, particularly healthcare and semiconductors, continued to perform well. Companies like Intuitive Surgical and Nvidia are benefiting from the integration of AI technologies in medical and tech industries.

5. Commodities: Canadian oil and gas pipeline companies performed strongly, driven by solid Q2 results and long-term contracts.

However, our most beloved sector “Nifty IT” any dip towards 40000 now if comes remains a good buying opportunity with now upgraded target of 45000 in September series. However with expectations of continuous outperformance by “Nifty IT” now remain a buy on dip towards 40000-41000 for a positional target in September series towards 45000 mark. However, we have already raised our positional target of 53000 in “Nifty IT” till March 2025 with volatilities in between the roads ahead & the second half of the 2024 is going to be of “Nifty IT” broadly. In the between the heavy weights like TCS Infosys & Wipro may continue to remain into focus.

Advance tax collection in FY till June 15 surged 27.6% to ₹1.48 lakh crore, with ₹1.14 lakh crore as corporate tax and ₹34,362 crore as personal income tax, indicating a strong economy and corporate performance. 

The Centre’s gross tax collections (post refunds but before transfers to states), stood at Rs 4.6 trillion in the first two-months of the current financial year, 15.9% higher than the year year-ago level, data released by the Controller General of Accounts (CGA) showed on Friday. This is against 10.6% annual growth pegged in the Budget for FY25.

Net tax revenue (after refunds and after devolution to states) during April-May, stood at Rs 3.19 trillion, accounting for 12% of the Budget estimate of Rs 26.02 trillion. However, during the same period of FY24, net tax revenue had accounted for about 16% of the Budget target.

Institutional players were net biased on each factors last week. When FII’s continues now turned net buyer with net inflow of Rs.2,430.53 cr. last week while DII’s continued to remain net buyer’s with net further inflow of Rs.7,442.20 cr.

Nifty last week remained in the hands of bears where Nifty although made another ATH of 25333.65 to give a close at 24852.15 with net loss of  383.75 points i.e. net negative of 1.52% for the week.  Nifty in the coming week ahead may show some crucial support at 24500 while upside potential could be towards 25000 kind of levels. Overall the September series remains bullish on a positive nod. However, this time the sector specific rotation is on the cards which could be supported by different sectoral rotations. Specialty chemical along with “Nifty IT” to remain into focus in the coming week ahead followed by certain heavy weights like Release & HDFC Bank etc.

Sensex too has shown the trigger of bears but may eventually closed the week at 81183.93 with net loss of 1181.84 points i.e. net negative of 1.43% for the week. In the coming week ahead the Senssex may find its crucial support at 80000-80300 kind of levels & from those levels the upside potential could be towards 82300 kind of levels with certain hiccups on its way. However, this time the sector specific rotation is on the cards which could be supported by different sectoral rotations. Specialty chemical along with “IT sector” to remain into focus in the coming week ahead followed by certain heavy weights like Release & HDFC Bank etc.

Bank Nifty may find its crucial support levels at 49000 kind of levels while from those levels the upside potential could be towards 52000

Bank Nifty however remains bullish only above 51500 while any drag towards downside could take it towards potential target of 49600-48000 kind of levels. While any close on or above 51500 could take us towards 52000-52800 kind of levels. Mid-cap private banks are like RBL Bank, Bandhan Bank etc. & in large cap counter HDFC Bank are likely to outperform may support the upward momentum.

In Nifty Financial Services the crucial support / reversal level could be around 23000 while from those levels the upward momentum target could be around 23500-23750 kind of levels

In our most beloved sector “Nifty IT” any dip towards 40000 now if comes remains a good buying opportunity with now upgraded target of 45000 in September series. However with expectations of continuous outperformance by “Nifty IT” now remain a buy on dip towards 40000-41000 for a positional target in September series towards 45000 mark. However, we have already raised our positional target of 53000 in “Nifty IT” till March 2025 with volatilities in between the roads ahead & the second half of the 2024 is going to be of “Nifty IT” broadly. In the between the heavy weights like TCS Infosys & Wipro may continue to remain into focus.

Till March 2024 the number of Demat Accounts has risen to whopping 14.39cr. which not only helps the capital markets directly but also directly to Equity investments.

In the FY 2023-24 so far the Direct Tax collection has amounting to whopping Rs. 18, 90,259 cr. has seen the surge of nearly 19.88% as compared to its previous year collection of Rs. 15,76,776 cr. .

Brief Levels of Nifty / Sensex/ Bank Nifty / Nifty Financials / Nifty IT:

Nifty CMP:  24852.15
Nifty Immediate Target : 25000
Nifty Immediate Support: 24500

Sensex CMP: 81183.93
Sensex Immediate Target: 82300
Sensex Immediate Support: 80000-80300

Bank Nifty CMP:  50576.85
Bank Nifty Immediate Target: 52000
Bank Nifty Immediate Support: 49000

Nifty Financial CMP: 23529.75
Nifty Financial Crucial Target: 23500-23750
Nifty Financial Crucial Support: 23000

Nifty IT CMP: 42228.90
Nifty IT Potential Upside: 45000 / 53000 (As the case may be)
Nifty IT Crucial Supports: 40000

Stock on Radar:

Large Caps:

• LIC (CMP 1043): This large-cap counter has been on our radar since 850 subdued levels from there it has already tested 1200+ it now again looks attractive to add on dips towards 1010 with strict SL placed at 900 for an estimated possible target of 1200+ kind of levels.

• Wipro (CMP 524): This large-cap IT counter looks good to add on dips towards 515 with strict SL placed at 490 for a potential upside of 550 in a month time frame.

• SBI Cards (CMP 800): This large cap has been on our radar since subdued levels of 700 & beneath & still looks good to accumulate here at CMP 800 with strict SL placed at 720 for target 1000 & above in 2 months time frame.

• IOC (CMP 177): This oil counter looks like can cool off here at CMP 177 with strict SL placed at 184 for a possible cool off towards 160 for the coming week.

• Tata Technologies (CMP 1113): This large cap counter has shown selling since its listing but now looks for a poised upside from CMP 1113with strict SL placed at 970 for a potential upside towards 1400.

Mid- Caps:

• Orient Cement (CMP 308): This mid cap reality counter looks good to accumulate on dips towards 300 with strict SL placed at 275 for an estimated possible target of 350.

• All Cargo Logistics (CMP 67): This mid-cap logistics counter looks good to accumulate here at CMP 67 with strict SL placed at 60 for a potential upside target of 90 in 3 months time frame.

• RBL Bank (CMP 212): This mid cap counter looks good to accumulate on dips towards 209 with strict SL placed at 189 for a possible upside of 260 in September series.

• Anupam Rasayan (CMP 763): This mid-cap specialty chemical counter can form bottom here somewhere at 763 with strict SL placed at 730 with possible upside of 877 within 3 months time frame.

• Infibeam Avenues (CMP 30): Another mid-cap IT counter looks attractive at CMP 30 with strict SL placed at 25 one can expect a potential upside of 40 in no time.

Small & Mid-Caps:

• K&R Rail Engineering (CMP 428): This small cap counter looks good to accumulate here at CMP 428 with strict SL placed at 400 one can expect upside towards 540 in 3 months time frame.

• Premier Explosives (CMP 563): This chemical small cap counter looks good to accumulate here at CMP 563 for an estimated possible target of 620 with strict SL placed at 530.

About the Author:

Mr. Vishal Gupta a SEBI Registered Research Analyst is the founder of “VG STOCK RESEARCH”, founder of “THE ANALYSIS ROOM”, a writer & an advisor having rich experience in Indian Equity Markets who has spent years comprehending an industry wide shift and risk management with more than 12+ years exploring in depth analysis of the Equity & Derivatives with accuracy of 90% and above.

He has also been into teaching Fundamental Analysis for quite some time giving investors/traders comprehensive knowledge & skills of Indian Equity Markets.

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