The Nifty 50 remained under pressure through much of Monday’s session and briefly slipped below the 24,000 mark, touching a low of 23,993. The decline also resulted in a lower low on the daily chart. However, the index recovered 86 points from the intraday low and settled at 24,080.40, lower by 95.25 points or 0.39%.
With Monday being the final trading session of August, the Nifty ended the month down 1.24%. This brought an end to the two-month winning run seen in June and July. The closing level was also close to where the index had settled on August 19.
CAS Impact on Bank Nifty and Nifty Midcap on Monday
Another talking point was the sharp movement during the Closing Auction Session. Bank Nifty moved by more than 600 points during the CAS, while the Nifty Midcap 100 recorded a swing of around 550 points. Such large movements during the closing mechanism have made the final price discovery more difficult for traders to interpret.
Nifty Forms Hammer Candle on Daily Chart
The late recovery resulted in the formation of a hammer candle on the daily chart. This keeps the possibility of a short term rebound open, but the pattern still needs confirmation.
The first level to watch is Monday’s high of 24,129. A close above this level would strengthen the hammer formation and could pave the way for a move towards the 50 DMA, which is placed near 24,210.
Above that, the 24,370 to 24,400 region remains the next important hurdle.
The broader setup, however, has not yet turned favourable. Nifty continues to trade below both the 20 DMA and the 50 DMA, while the 20 DMA has started sloping lower. This suggests that short term momentum remains weak despite the recovery from Monday’s low.
On the downside, the 24,000 mark remains crucial. A decisive close below this level could drag the index towards the July 27 gap area between 23,892 and 23,824.
Strong GDP Print Could Influence Early September Trade
The Tuesday, September 01, session will also factor in India’s GDP data released after market hours on Monday. The growth figure came in ahead of expectations and could provide some support to sentiment at the start of September.
At the same time, auto stocks are likely to remain active as companies release their August sales numbers. Stock specific moves within the sector could therefore remain elevated on Tuesday.
September Has Historically Favoured Nifty Bulls
Seasonality also offers an interesting backdrop as the market enters September.
Over the past five years, Nifty has ended September with gains on four occasions. The only negative year during this period was 2022, when the index fell 3.74%.
A longer term look at data since 2009 shows that September has delivered an average gain of around 1.76%.
Historical trends do not guarantee a positive month, but the combination of better-than-expected GDP growth and relatively favourable September seasonality provides some support to the bullish case.
For now, the market remains at an important technical juncture. A sustained move above 24,129 would improve the chances of a recovery towards 24,210 and subsequently 24,370 to 24,400. On the other hand, a break below 24,000 would put the focus back on the 23,892 to 23,824 gap zone.
Stock to Watch: Indo Count Industries (ICIL)
Indo Count Industries has broken above a horizontal resistance zone, with the move accompanied by above average volumes. The stock is trading above its 20, 50, 100 and 200 DMA, while these moving averages are also aligned in a bullish sequence and trending higher. This indicates that the broader price structure remains positive.
Momentum indicators are also supportive. The daily MACD has recently generated a buy signal and continues to hold above its nine-period average. At the same time, the 14-period daily RSI remains in bullish territory, indicating strength in momentum.
As long as the stock sustains above the ₹470 to ₹471 zone, the technical outlook remains positive. On the upside, it can move towards ₹500 and subsequently ₹520. A stop loss can be maintained at ₹440.
Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.
