By V K Sharma
The markets inched higher during the first three sessions of the week but declined on Thursday following the unfortunate plane crash in Ahmedabad. The slide continued on Friday after Israel launched a pre-emptive strike on Iran’s nuclear facilities. For the week, the Nifty lost 285 points, or 1.14%.
While talks between the US and Iran on Tehran’s rapidly advancing nuclear program have yet to take place, Israel launched a pre-emptive strike on Iran’s nuclear facilities and key leadership in the early hours of June 13. On Friday, the Nifty opened with a downward gap of 415 points. The opening and intraday low were the same, indicating that the market was in recovery mode. It eventually closed with a loss of 170 points at 24,718.
Now let’s take a look at the adjoining daily candlestick chart. After making an intraweek high of 25,222 on June 11, the Nifty declined to a low of 24,473 before closing at 24,718. Pay close attention to trendline number 63, which has been drawn by connecting the lows of 24,378 and 24,462, formed on May 12 and May 22, respectively. The Nifty has respected this trendline on June 2, 3, and 4, closing higher each day despite testing the trendline intraday.
An important point to note is that although the trendline was breached during intraday trade on Friday, June 13, the Nifty closed above it. This suggests that, on a closing basis, the trendline has been respected. To stay cautious, 24,473 can be considered the first support level. The second support comes from the gap created on May 12, when the Nifty surged sharply. The high on May 9 was 24,164, while the low on May 12 was 24,378—indicating a gap that could be filled if the first support fails to hold. On the upside, resistance is seen at 24,936.
PM Narendra Modi is scheduled to attend the outreach session G 7 Summit in Canada with the background events making it special. First, Canada’s new PM, Mark Carney, presents an opportunity to reset bilateral ties. Second, this follows the successful Operation Sindoor. Third, US President Donald Trump has called on other NATO members to increase their defence contributions to 5% of GDP, up from the current 2%.
It stands to reason that other NATO members might prefer to produce their own defence equipment, locally in India under the liberalised Make in India programme, rather than paying a premium for costly US-made systems.
(The author is a veteran in the capital markets with over three decades of experience.)