Oil Cools below $90, will Nifty Bears feel the Heat?
Nifty recovery from 23,300 stays on track towards 23,600-23,750, holding above 23,280 remains important.
As of 08:29 IST, 23 Sept
Nifty recovered from the 23,300 support as crude cooled sharply. Saudi Arabia restarted its East-West pipeline to the Red Sea on Tuesday, and Iran signalled it could reopen the Strait of Hormuz within a week if the US eases military pressure and lifts its blockade of Iranian ports. Brent has slipped below $100 for the first time since September 8, trading near $98.
Technically, the recovery marks a reversal on the hourly chart with a theoretical target of 23,600-23,750. Support now stands at 23,280 - a breach of the same may nullify the positive set-up and drag the market back towards 23,000.
Global cues are mixed to positive. Asian markets traded higher and Nasdaq closed at a record high for the second straight session, while US-Iran talks at the UN remain the key sentiment driver. Trump said there is momentum for a deal, even while keeping military threats on the table.
The Yen remains weak near 157.5 against the US Dollar, with intervention risk rising as USD/JPY drifts towards 160. For now, Yen and Crude remain the two key macro variables to watch.
The Larger Picture
The market resumed down trend to 23000-22500 level after Nifty completed 61.8% retracement of the entire fall at 24752 during consolidation, and has now made low 23118 against our 1st target of 23000.
The market has already absorbed the immediate Fed and BoJ rate decisions.
The more important variables from here are Yen, crude oil and global liquidity.
The Yen remaining weak is currently helping delay a larger carry-trade unwind. A sharp Yen appreciation, particularly towards the intervention zone, could change this equation quickly.
At the same time, falling crude would remove one of the biggest sources of inflationary pressure currently affecting emerging markets.
For India, this creates a two-sided setup:
01 Weak Yen + cooling Oil = supportive for equities
02 Strong Yen + elevated Oil = risk of renewed selling
Key Macro Risks Ahead
Tips disappears, Tradzo stands with you.
- 1.Probability of US sanction based Tariffs on India.
- 2.Crude & Refining capacity around the world translating inflation in downstream crude products, Urea shortage leading food security concerns
- 3.Escalation of US-Iran war to entire West Asia
- 4.US Debt & housing collapse due to unwinding of Yen carry trade.
- 5.AI Bubble burst - AI maybe becoming popular and very successful tools in the right hands but for majority its just new dopamine, with sky high valuations and no signs of profits.
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Tradzo Research
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