Opening Bell - Morning Commentary

Nifty's 22800 Level - A Make-or-Break Point for Bulls

US stock markets will remain closed on Monday for President's Day 2025, marking the birth anniversary of the first US President, George Washington. Asia share markets are also becalmed by a Wall Street holiday on Monday.

The Dow Jones stayed close to its all-time high, just one percent below its peak. The dollar nursed losses suffered after a weak U.S. retail sales report rekindled wagers for two rate cuts this year.

Easing inflation has opened the door for the Reserve Bank of Australia to begin an anticipated brief series of interest rate cuts, starting with a quarter-point reduction to 4.10% on Tuesday. In Japanese data, both GDP and CPI are expected to surprise on the upside.

The minutes of the Fed's last meeting are due on Wednesday and should offer some detail about the outlook for further easing. At least six Fed officials are due to speak this week.

The Indian equity markets continue to exhibit weakness, trading below critical short-term moving averages amid mounting pressure. Last week witnessed significant selling pressure in the mid-cap and small-cap segments, with several stocks experiencing sharp corrections. The global markets are scaling to new all-time highs, which could support Indian markets in limiting the downside from here.

While Indian market breadth remains subdued, technical indicators are fast approaching an oversold territory, suggesting a potential reversal. The percentage of stocks trading above their 200-day moving average in the NSE500 universe has fallen to 14%. Historically, significant downtrends have formed bottoms near such levels.

The benchmark Nifty index has shown resilience around the crucial 22,800 mark, managing to stage minor rebounds from this support level on multiple occasions. If the index defends the 22,800 level, it could trigger short covering, potentially leading to a technical bounce. A decisive move below the 22750-22800 zone could trigger further selling, potentially pushing the index toward its next support level at 22460.