GST Reforms, Ukraine Tensions, and US Tariffs: What's Driving Nifty This Week

Market Outlook and Key Indicators

The Nifty index concluded the previous week above 24,600 in a holiday-shortened trading session. The GIFT Nifty indicates a potential gap-up start for Dalal Street on Monday, fueled by the announcement of GST reforms by Prime Minister Narendra Modi and a simplified 2-slab system ahead of Diwali. These changes are anticipated to enhance household disposable income and boost consumption.

Over the weekend, US President Donald Trump called for a “peace agreement” to end the Russia–Ukraine war. Although no ceasefire or deal was reached, the call signals a shift toward easing global tensions. Ukrainian President Volodymyr Zelenskyy is set to visit Washington on Monday, alongside other EU leaders, for further discussions.

Analyst Perspectives

FrontWave Research, an SEBI-registered analyst, suggests that even a partial de-escalation in the Ukraine-Russia conflict could lead to softer oil prices. This, in turn, may ease pressure on the rupee and inflation. However, the proposed GST cuts might widen the fiscal deficit, leading to expectations of rising yields. If unchecked, this could put pressure on Nifty’s valuation multiples despite improved consumption demand.

India is also preparing for additional 25% trade tariffs that will take effect from August 27. The US appears to be taking a harder stance, as the next round of trade talks scheduled for August 25 has reportedly been postponed.

Monday Trade Setup

Bharat Sharma of Stockace Financial Services noted that on the weekly timeframe, the Nifty index formed a green candle, reclaiming the 20 Exponential Moving Average (EMA). It also created a "Tweezers Bottom," indicating that the market could generate upward momentum if it breaks above the candle high in the 24,700 to 24,740 range.

On the daily timeframe, the market has crossed the 100-day EMA and closed above it, which is considered a positive sign. This could act as a booster to further resistance levels of 24,740 (20 EMA) and 24,800 (50 EMA). Sharma stated that higher timeframes suggest a positive sentiment, with these levels likely to be tested within the current week for further confirmation.

Intraday Analysis

On the intraday front, immediate support is seen at 24,600, which, if breached, could lead to 24,550, followed by the 24,500 to 24,450 range. However, given the positive signals from higher timeframes, the likelihood remains high that these support levels will hold.

On the upside, immediate resistance is observed at 24,670-24,680, followed by 24,720-24,740 (20-day EMA levels). If the market maintains momentum above these levels, Sharma expects the Nifty index to test the 50-day EMA and crucial support of 24,800. Overall, the market is likely to trade between 24,500 and 24,800.

Sharma added that while there is an expectation that PM Modi's upcoming GST reform announcements on Monday will drive a significantly positive market reaction, traders must remain cautious. The market will need to test critical technical levels to confirm any sustainable upside.

Additional Insights

Ashish Kyal highlighted that the opening hour trade on Monday will be crucial for the Nifty index. It could test Gann levels of 24,728 again, with immediate support seen at 24,540.

For updates and corrections, email newsroom[at]HAWXTECH[dot]com.