In the meantime, foreign institutional investors (FIIs) continued their sales spree in August, which means that shares worth RS 25,564 crore loads via the stock exchanges until 23 August. This took the total shares selling this year by FIIs to that date up to RS 1.57,440 Crore, according to market data.
With this, analyst Sudeep ShahVice -president and head of technical and derivatives research SBI effectsInteraction with ET markets with regard to the prospects for Nifty and Bank Nifty, as well as an index strategy for the coming week. The following are the edited fragments from his chat:
What is your general view of the markets and where do you think Nifty is going?
Last week the Benchmark -Index Nifty began to act on a robust note, supported by a series of encouraging macro and policy developments. The rally was mainly powered by the decision of S&P Global Ratings to upgrade the sovereign prospects of India, which strengthened the trust of investors in the economic resilience of the country. In addition, the announcement of Prime Minister Narendra Modi of the next generation GST reforms, which is expected to roll out by Diwali, has added further momentum. These reforms are intended to simplify the tax structure and to reduce the burden for consumers and MSMEs, thereby supporting broader economic growth.
The Bullish Sentiment continued to exist the week and pushed the index to a peak of 25153 by Thursday. Despite the strong upward movement, Nifty had difficulty breaking the 61.8% Fibonacci retracement level of the previous corrective phase decisively (from 25669 to 24337). This technical resistance caused a profit booking on Friday, which led to the formation of a bearish candlestick with a pronounced upper shade, a traditional indication of sales pressure at increased levels.
On the daily graph, the index has formed an evening star candlestick pattern, which is usually seen as a bearish signal. This pattern, in combination with the rejection at an important Fibonacci level, suggests that the bulls can lose grip, and a period of consolidation or a corrective movement can be on the cards, unless fresh positive triggers come forward. The most remarkable, during this retreat rally, the RSI failed to cross the 60 marking.
Continue, the zone of the 100-day EMA of the level of 24650-24600 will act as important support for the index. While it is at the front, the zone of 25050-25100 will act as a crucial obstacle for the index. Every sustainable movement on both sides will lead to a trending movement in the index.
Any expectations of the FIIs based on the cash and FII-short data?
Despite a slight improvement in the FII-Lang-Short ratio of 7.95% on 13 August to 10.70% on August 22, mainly as a result of some short coverage-staying Fii’s important short positions in indexfutures. Interesting is that the last time that the long -diving ratio fell below 10% in March 2023, where it remained at these levels for three consecutive sessions. That period coincided with a market base, after which Nifty went higher.
This time, however, the ratio remained below 10% for no fewer than 14 commercial sessions before he again rose above the goal for the past two days. It is striking that recent positive developments, such as the S&P Global Ratings Upgrade and GST rationalization, have not made a sense of the FII sentiment. Instead, concerns around the US-India rate situation, a reinforcement of dollar against the rupid and the mess around FED chairman Jerome’s coming athlete on the Jackson Hole Symposium-Die could be the September prospect of September-Modus in a varying “Daetent” Modus.
Cash market flows reflect this sentiment. Since the beginning of August, Fii’s 25751 have reached Crore, after net outflows of 47667 Crore in July. In the past six weeks, the FII activity has consistently reflected the bears. But despite this heavy sale, Nifty has only corrected 3.11% compared to the height of 30 June of 25669. The resilience is largely due to the strong domestic institutional investor (DII) support, with the influx of 66184 Crore since 1 August. Even in July, when FI 47667 sold Crore, Tue came in with the purchase of 60939 Crore, knife cushion of a deep correction.
Historically, the week prior to the monthly expiry date is often witness to sharp fluctuations in the long -diving ratio, especially on the due date itself. When FIIs start covering shorts and buying on the Kasmarkt, Nifty can quickly regain.
What is your opinion about Bank Nifty?
Bank Nifty was lagging behind the wider market indexes last week, which is a reflection of persistent weakness in bank shares. After having hit a weekly high point of 56156, the index witnessed a sharp fall of more than 1000 points, eventually closing to 55150, with 0.35% dropped for the week. On the weekly graph, this step resulted in the formation of a considerable bearish candle, which emphasized the dominance of sellers during the week.
The relative underperformance is clearly visible in the Bank Nifty/Nifty Ratio graph, which has fallen to a low layer layer, underlines the weakening strength of bank shares compared to the wider market. Technically, the index now acts under both the exponential advanced averages of 20 days and 50 days, with both averages downwards and a sign from deteriorating short to medium-term momentum.
As an addition to the Bearish Toon, the daily RSI is about to slide below 40 points, which indicates the weakening of the internal strength and the increasing downward risk. Unless there is a strong reversal or supporting news flow, the index can remain under pressure in the short term.
Speaking of crucial levels, the zone of 54900-54800 will act as immediate support for the index. Each sustainable movement below the level of 54800 will lead to further correction in the index to the level of 54300, followed by the 200-day EMA level of 53544. While at the top, the zone of 55600-55700 will act as Ian Mortant Hurdle for the index.
What is the image of the consumer’s sustainable sector now, with the announcement of the PM of a reduction in GST?
The handy sustainable index of the consumer has demonstrated strong outperformance after the announcement of the prime minister about GST reduction, which is expected to stimulate the question in the sector. The index rose nearly 4% last week and formed a large bullish candle on the weekly graph, which indicates renewed investor’s interests.
Technically, the index has gone above its most important progressive averages on both daily and weekly timetables, which strengthens the strength of the upward trend. Sentiment is further supported by improving momentum indicators, which suggests that the sector will probably continue its outperformance in the short term, especially if the GST section translates into improved consumer expenditure.
Is the IT sector now the power back?
The Nifty IT index showed early signs of recovery last week by closing for the first time since July 2025 above its 20-day EMA, which is a positive technical development. Despite this step, however, there is still clear power.
The overall structure will remain for the time being, because momentum indicators still have to confirm a strong bullish reversal and the index will remain behind in relation to other sectors. A persistent movement above the most important resistance level (36000), supported by volume and improvement of RSI, would be needed to confirm a meaningful trend removal.
On which other sectors do you concentrate now?
Nifty Auto: The index has a strong outbreak of a 13 -week consolidation range on the weekly graph, which indicates renewed bullish momentum. The index has considerably surpassed the front line indices, risen more than 5% in the past week and confirm its leadership within the wider market. This outperformance is further validated by the Nifty Auto/Nifty Ratio graph, which has risen to a highest point in 43 weeks, which indicates a persistent relative strength in the car room. Technically, the index acts well above its most important progressive averages on both daily and the weekly timetables, which reflects a strong underlying trend. As an addition to the Bullish Setup, the weekly RSI was crossed over 60 markings for the first time since October 2024, a sign of strengthening the momentum and the growing investor’s interest in the sector. Given these technical confirmations, Nifty Auto is well positioned to continue the outperformance in the short term, apart from important market -wide disturbances.
Apart from this, Nifty Consumer will probably continue their outperformance sustainable, health care, pharma and India tourism.
On the other hand, Nifty CPSE, PSE and private banks will probably find out the frontline indices.
Are there well -placed shares?
From a technical point of view, Apollo Tyre, Mphasis, Nykaa, RCF, Dixon, ABFRL and Poonawalla Fincorp will probably continue their Noordwart journey.
((Indemnification: Recommendations, suggestions, views and opinions of the experts are their own. These do not represent the views of economic times)
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