By V K Sharma
After falling for nine straight sessions from 18 September to 30 September, the Nifty finally regained momentum in the October series. It closed the holiday-shortened week 0.97% higher at 24,894. The Bank Nifty did even better with a gain of 2.21%, while metals stole the show as the sectoral index soared 3.93%.
Yet one thing remains unchanged — FIIs’ appetite for short-selling. October opened with their highest-ever short positions at 94%. The weak rupee is both cause and effect of FII cash-market sales. A close above 25,400 would send even battle-hardened FIIs scurrying to cover. For the mild-hearted, a nudge past 25,100 may suffice to trigger a rethink. Support lies at 24,587.
The Nifty had dropped 861 points from the 25,448 swing high of 18 September to a 30 September low of 24,587. Fibonacci levels of 24,916 (33.2% retracement), 25,018 (50%) and 25,119 (61.8%) now act as step-by-step resistances.
Despite the US persistently needling India on trade, rolling out fresh toolkits to destabilise the country and stir trouble in the neighbourhood, markets have handled it remarkably well. Timely government action ensured these were nipped in the bud.
US shutdown & Economic sata
Meanwhile, key US indices ended higher for the week: the Dow and S&P 500 gained 1.1% each, while the Nasdaq rose 1.3%. The rally came even with the government in shutdown mode.
Because of the shutdown, the September nonfarm payrolls report was not released on Friday morning. In its absence, markets will keep digesting earlier data. ADP said September private payrolls posted their sharpest drop since March 2023. In addition, ISM’s non-manufacturing PMI fell to 50 in September from 52.0 in August, signalling a stall in services, which account for more than two-thirds of the US economy.
Since 1976, there have been ten US government shutdowns, lasting from 3 to 35 days. Trump holds the dubious record of the longest during his first term. Historically, shutdowns have not been market-moving events.
The shutdown will reduce the economic data available to the Fed at its 29 October meeting. Against the weak ADP backdrop, the Fed may err on the side of caution — I expect a 0.25% rate cut at that meeting.
Stay vigilant.