Trade Setup for September 22: Nifty set for reaction to multiple triggers on new GST implementation day

Weekends are generally meant to unwind. However, the newsflow over the last two days have meant that this weekend has been anything but to unwind.

From US President Donald Trump's H-1B visa confusion, to the consequences that India's IT companies will face, more attacks on India's Shrimp exports to the US, to Prime Minister Narendra Modi's address to the nation, and of course, the first day of Navratri, and the day when the lower GST rates finally take effect, the Nifty 50 and the markets need to react to all of this going into Monday's trading session.

The Nifty bulls were hoping to end another good week on a high but that was not the case on Friday. After nine days of making higher lows on the charts, that streak was broken on Friday. The attempts to scale 25,500 on the Nifty failed, as the index somehow managed to salvage the 25,300 mark on the downside.

Monday's moves will all depend on how India's IT stocks react to the Trump administration's H-1B visa announcements. The US-listed shares of Infosys and Wipro fell up to 4% on Friday. In between, there has been multiple clarifications issued by the White House on whom are these new regulations applicable to and who are exempt.

Next of course are the consumption-oriented names, from Autos to FMCG to consumer durables, that will be in focus as the new, reformed GST rates take effect from Monday. Auto stocks have continued to move higher on the news with most of them trading at record highs, it will be interesting to see what this month's sales figures throw up next week.

Also watch out for India's shrimp stocks, which are in focus yet again due to developments in the US. Reports suggest that US Senators have introduced the India Shrimp Tariff Act, to safeguard Louisiana's shrimp and catfish industries from 'inexpensive' Indian imports. Keep Avanti Feeds, Apex Frozen and Waterbase on your radar.

For the Nifty, the level of 25,500 continues to remain an important barrier for the index, while 25,250 and 25,200 on the downside could act as supports. The Nifty Bank ended a 12-day winning run, and also closed below the 55,500 mark, which will now become the first important level to cross before it looks to scale back towards 55,700 and 56,000 eventually.

The Nifty setup remains positive and any dip or consolidation should be viewed as healthy for the next leg of the rally, said Rajesh Bhosale of Angel One. He added that 25,200 - 25,100 zone is a key support, while on the flip side, the 25,450 - 25,500 level will be an important resistance, followed by the June swing high of 25,670. "Considering the overbought conditions and proximity to key resistance, there is a high likelihood of short-term consolidation with a positive bias," Bhosale said.

"The index is approaching its trendline resistance zone near 25,500. A decisive breakout could pave the way for a move toward 25,750. On the downside, the 24,900–25,150 zone is expected to act as strong support in the event of profit-taking," Ajit Mishra of Religare Broking said.