Market Opening and Global Cues
GIFT Nifty is trading at 24,882, up 59 (7:45 AM) points from the previous close, indicating a positive opening for both Sensex and Nifty 50 on Friday. Asian Pacific markets are expected to open mixed, with Japanese markets set to open higher following positive cues from Wall Street after U.S. President Trump formalized lower tariffs on Japanese auto imports.
The U.S. markets closed higher overnight, with the S&P 500 rising 0.83% to 6,502.08, Nasdaq gaining 0.98%, and Dow up 0.77%. This positive sentiment stems from optimism around Federal Reserve rate cuts following weak U.S. jobs data.
Key Technical Le vels and Support/Resistance
Nifty 50 Outlook
The Nifty closed at 24,734.30 (+0.08%) on September 4, after giving up most of its intraday gains from GST reform optimism. The index faces a mixed technical picture:
Critical Levels:
- Resistance: 24,900-25,000 (immediate), 25,022 (strong)
- Support: 24,700-24,400 (key levels), 24,337 (confluence zone)
- Max Pain: 24,750
Technical indicators show mixed signals with 5-day and 20-day SMAs bullish, but other short and medium-term SMAs bearish. The index is showing a bearish marabou pattern despite positive news.
Bank Nifty Analysis
Bank Nifty closed at 54,075.45 (+0.01%), showing minimal movement. The index remains in a bearish trend with:
Key Levels:
- Resistance: 54,300-54,800
- Support: 53,500-54,000 (crucial), 52,500-52,000 (extended)
A breach below 53,600 could signal acceleration towards lower levels.
FII/DII Activity and Market Flows
Foreign Institutional Investors (FIIs) continued their selling spree, net selling ₹106.34 crore on September 4, marking the fourth consecutive day of outflows. However, Domestic Institutional Investors (DIIs) remained strong buyers, purchasing ₹2,233.09 crore worth of equities.
September Month-to-Date Flow:
- FII Net Selling: ₹4,361.99 crore
- DII Net Buying: ₹11,622.86 crore
This divergence suggests domestic support is cushioning foreign selling pressure.
Currency and Commodity Impact
The Indian Rupee closed at 88.18 against the US dollar, weakening by 11 paise from the previous session. The currency remains near record lows due to:
- S. tariff concerns
- Foreign portfolio outflows
- Strong dollar index
Crude oil prices declined, with WTI trading at $63.20 per barrel (-0.45%) and Brent at $66.79 per barrel (-0.30%), providing some relief to India’s import bill.
Sectoral Analysis
GST Reform Winners
The GST Council’s decision to reduce tax rates on various items is expected to benefit:
- Auto sector: Direct beneficiary of lower GST rates
- FMCG companies: Lower costs could boost demand
- Consumer durables: Expected demand revival
Key Sectoral Performance Expected:
- Auto: Positive momentum from GST cuts and rural demand
- IT: Mixed outlook with some weakness seen
- Metals: Selective opportunities with renewable energy adoption
- Pharma: Pressure continues with profit-booking
Market Risks and Challenges
Key Risk Factors:
- S. Tariff Impact: 25% tariffs on Indian goods creating headwinds
- FII Outflows: Persistent foreign selling pressure
- Currency Weakness: Rupee near record lows affecting import costs
- Global Uncertainty: Trade tensions and geopolitical concerns
Trading Strategy and Outlook
For Friday’s Session:
- Nifty: Watch for sustained move above 24,900 for bullish momentum; failure could lead to retest of 24,700-24,400 support zone
- Bank Nifty: Critical to hold 54,000 levels; break below could accelerate decline to 53,500-53,300
- Strategy: “Sell on rise” recommended given mixed technical signals and overhead resistance
Conclusion
The Indian market faces a cautious outlook for September 5, with positive global cues offset by domestic challenges including persistent FII selling, currency weakness, and tariff concerns. While GST reforms provide some optimism for consumption-driven sectors, technical indicators suggest a consolidation phase with resistance at higher levels. Traders should watch key support zones closely, particularly the 24,400-24,700 range for Nifty and 53,600-54,000 for Bank Nifty.
The market is likely to remain volatile with stock-specific action as investors digest the impact of policy changes and global developments. DII buying support may provide a floor, but sustained recovery requires clarity on U.S. trade policies and improved FII sentiment.
***Data Sources :-
https://economictimes.indiatimes.com/
https://www.moneycontrol.com/
https://in.tradingview.com
Analyst Name: Pradeep Suryavanshi
Bestmate Investment Services Pvt. Ltd.:
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