During the Month of August, NIFTY slipped from above 24700 to approximately 24000. During this period several sectors led the fall, and in fact, fell more than NIFTY in % terms. The most prominent among them was FMCG. While Auto pulled back as well, Energy and Public Sector fell more or less at the same pace as Nifty.

However, it’s during such times that a few sectors that hold their strength are the ones that have the potential to become the leaders of next bull run, if and when index turns. The gauge to measure such a strength is the ratio (sectoral index / Nifty 50 – lower panel).

There were 4 notable sectors whose ratio rose during August, implying strength during the fall:

1. IT Index - Index rose along with ratio

2. BankNifty - remained more or less sideways, ratio went up

3. Metal - Index and ratio rising together

4. Pharma - Index and ratio, both rose together

To watch: Any signs of NIFTY turnaround, that can provide tailwind to the stronger sectors.

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BANKNIFTY has formed a Double Inside Bar, implying that the range (High-Low) of current August Month is within the July’s High-Low range, which in turn is within June’s High-Low range.

Incidentally, August’s range is also the smallest range since 2020. A mere 2.19%.

This is a classical form of Compression.

To watch: A Breakout, whichever side, out of July’s range that can potentially put BANKNIFTY in Trending Mode.

28th August 2026 Recap:

Oil & Gas Index poised for an Explosive Move!

The Oil & Gas Index has been in a corrective since 2024 Highs, and since 2025 Lows has been in a sideways range with price range compressing further.

This narrowing of prices making Lower Highs and Higher Lows form a classical Symmetrical Triangle, now reaching its Apex point, from where the Breakout becomes imminent. Simultaneously, the index is also within the +/-1 Standard Deviation Zone of regression trend channel from 2024 Highs. Any Breakout, whichever side, can potentially move the index to the far off bracket of +2/+3 Standard Deviation Zone (red lines), or -2/-3 Standard Deviation Zone (blue lines).

The move can be explosive and fast.

The constituents of the Index are as follows (Alphabetical Order):

Adani Total Gas Limited
Bharat Petroleum Corporation Limited
GAIL (India) Ltd.
Hindustan Petroleum Corporation Limited
Indian Oil Corporation Ltd.
Indraprastha Gas Ltd.
Oil and Natural Gas Corporation Ltd.
Oil India Ltd.
Petronet LNG Ltd.
Reliance Industries Ltd.

To watch: Break outside of the +/-1 Standard Deviation Zone (shaded in grey)

Zinc prices have been climbing to New Highs, up 33% from March itself.

This is driven less by a sudden demand boom and more by a tightening physical market and supply concerns.

While the demand for the year is expected to grow only between 1.3-1.8%, it’s the Mine supply that is expected to grow only about 0.3%. The differential is where the Markets are getting worried. Additionally, LME inventories are 64% below average and depleting further.

Due to this tilted Math, the chase has begun.

Backwardation in futures pricing shows the Market’s way of saying: Zinc Now, Not Later.

While Zinc Miners are going to benefit with this rally, there are a few industries that take Zinc as an input for their finished products and can, therefore, have an adverse impact with these runaway prices. These industries are: Galvanising Steel, Auto Components, Battery Manufacturers, and Paints and Coatings.

To watch: China replenishing LME inventories and if that begins to fill the Demand-Supply Gap.

Back in the 90’s Indian Markets were heavily concentrated. Beyond the flagship indexes, there were not many names that could be relied upon. At the dot com peak of early 2000, Nifty50 was around 1775 and Nifty500 was at 1750 (rounded numbers), almost 1:1 ratio. Though the exact ratio was 0.9875.

The crash that happened in Indian Markets post the dot com bubble that peaked with the infamous K10 stocks, had the broader Market suffer far more than the flagship Nifty and Sensex, which themselves cracked by over 50%. The Nifty500/Nifty50 ratio fell to as low as 0.61.

In the midst of all the storms that followed, the real India story began to take shape. It was during this time that UTI had frozen US-64, there was a Calcutta payment crisis, then the 9/11, that Indian Markets started with Derivatives, VaR Margins, Circuit Limits and much more of the unglamourous infrastructure of Modern Markets. With such structural reforms, the investor confidence began to rebuild and the real money started coming in, not from the broker’s leveraged accounts.

While the Nifty500/Nifty50 ratio now stands near about the same juncture 26 Years later, the Ocean underneath has changed. This time with far too many strong companies beyond the flagship index, backed by a much deeper and consistent pool of domestic money flowing through SIPs.

A crossover would imply a clear Broader Market growth in India, signifying firm structure and holistic expansion.

To watch: The ratio level of 0.9875

Current Levels

NIFTY50: 24260

NIFTY500: 23600

Ever since US Government Bond Yields began the climb, especially the 30 year one, the US Treasury got into action.

The Yield on 30 year US Government Bond now sits at 5.24%, notch below its recent High of 5.31%. Which are 20 year Highs. The rising Yields raise the US Government’s cost of Debt, which is at $40 Trillion. Furthermore, it’s this long end where Mortgages and Corporate borrowings are there as well. Rising Yields affects a large part of the Economy.

With this being the scenario, the US Treasury Secretary Scott Bessent has moved to support the Market through larger Treasury bond buybacks, in order to contain the Yields not only from rising but to bring them down. The Treasury General Account (TGA) could fund those purchases, with the first operation set for September 9.

This is not exactly QE, it’s more of sort of a QE. There’s no Fed asset purchase expected and no expansion in the Balance Sheet.

Yet for Gold, this distinction is not what matters. The core of the issue here is increasing Liquidity and the questions on sovereign credibility.

The Bond Market fight is slowly turning out to be The Gold Story!

To watch: i) The Method of Bond Buyback followed by the US Treasury Department. ii) The Amount assigned. iii) Gold’s Trending behaviour.

Gamma Exposure tells us how option market makers are likely to hedge. In positive gamma, they generally sell into strength and buy into weakness. These flows act like a shock absorber, suppressing volatility and pulling price back towards the centre of the range.

The latest Gamma Exposure snapshot shows spot at 24157, just above Put Support at 24100. Immediate Call Resistance remains at 24200-24300 zone, though 24200 marks the Gamma Flip.

With GEX Ratio at 0.77, it’s a positive Gamma environment.

That makes 24100 - 24300 the key expiry battlefield. As long as Nifty remains inside this band, the setup favours range bound movement, pinning and continued premium decay.

The interesting part begins at the Edges.

To watch: The Band of 24100-24300 for the 25th August Expiry. A Move outside the range can provide the thrust for a directional move with a stronger Momentum.

Dollar Index was on a rising spree since Feb of this year from the levels to 96 to over 101. Since July end it has been cooling-off to now below 99.

This cool-off in Dollar index, along with coming off of Real Yields post-War and the softening of the recent obstruction created by rising Nominal Yields with $4B Bond purchases, has resulted in giving fillip to the bounce in Metals.

The inverse relation in numbers:

• Gold -0.439 → strongest negative relationship of the three.

• Silver -0.374 → moderate inverse relationship.

• Copper -0.279 → weaker, because industrial demand can overpower the Dollar effect.

The regression betas tell the other half of the story: -1.03 for Gold, -1.75 for Silver and -1.00 for Copper. Historically, Dollar weakness has packed the biggest proportional punch in Silver, followed by Gold and Copper. This point is worth a Note for Silver Traders.

However, R-squared is only 19.3%, 14.0% and 7.8% respectively, meaning most metal price movement comes from forces beyond DXY. None of the three pairs is cointegrated either, so a falling Dollar can strengthen the bullish case, but only tell us a small fraction of the story.

To watch: The Feb DXY Low of 96.

NIFTY has been grinding in a zone over the past few months that has only been getting narrower. The index is now reaching an Apex point from where it will finally have to pick a Direction, making it clear that the Breakout that was supposedly eventual is now imminent.

A Breakout, whichever side, from here can potentially cause a strong Trending move in NIFTY, given quite obviously the time spent in the corrective.

There’s one more aspect here:

The standard deviation zones (with a lookback of as small as one week) are aligning with -1SD and +2SD of the Technicals in chart.

NIFTY has been honoring the polarity since 2025 with the countdown clock ticking. Much has come together with an Ascending Triangle on Technicals, a benign implied volatility and standard deviation zones in sync.

To watch: The much awaited Breakout.

Gold pays Nothing. No coupon, no dividend, no yield. Its entire return depends on price appreciation alone. That single fact also defines its weakness. Its competition is sovereign debt yields, and since US is the superpower US Bond Yields set the Global benchmark.

The chart shows two separate headwinds, arriving in sequence.

The first came during War. Gold should have run higher on war headlines, and briefly it did. But Real Yields, measured through TIPS, were climbing as the Federal Reserve held tight against an oil driven inflation scare. Rising real yields lift the true opportunity cost of holding precious metal. Gold fell from above 5300 in March to near 4000 by June, even with the geopolitical risk still alive.

Then came the Nominal Yields. The US 30 Year has moved from 4.62 percent in March to 5.27%, sitting near the top of its 2026 range and at 20 Year Highs. This is a supply and fiscal credibility story rather than a Growth story, and it keeps the discount rate elevated.

Gold performs best when money is cheap and uncertainty is high. Right now, only one of those two conditions is present.

To watch: US 30 Year Yields

NIFTY has been correcting since a few days, but despite the decline: ATM Implied Volatility (IV) is falling too.

Usually, when markets fall sharply, fear tends to rise. Which gets reflected in ATM IV. This happens because Traders rush to buy protection through puts, pushing up option premiums and IV then automatically moves higher. This combination of price falling + IV rising is quite often the signature of panic.

What we are seeing currently is different.

Nifty is coming off, and simultaneously IV is also cooling. This suggests that the decline is, at least for now, being absorbed in a relatively orderly manner. There is selling, but the options market is not pricing in a sudden escalation of fear. Or, there’s no significant perception of risk.

A sustained fall accompanied by declining IV can therefore indicate regular profit taking or a controlled correction, rather than outright panic.

Of course, IV can also be influenced by expiry effects, and with Nifty expiry today, that factor needs to be kept in mind. But the broader message comes from last few days of Trading sessions.

Price weakness without a corresponding rise in fear is a very different market character from a panic driven sell off.

To watch: In most such cases, index would be hunting for bottom. So, one can look for any technical bottoming signs as and when they appear. Meanwhile, also be aware that the real warning signal would emerge if NIFTY continues lower and IV suddenly starts rising sharply. That would suggest that the correction is beginning to acquire the psychology of fear.

The rupee has been on a continuous depreciation spree since May 2025, from 84 to the recent 97. While it has taken a break since 97, the rising regression channel remains intact. The cool off has been a sideways time corrective with no significant pullbacks.

This is despite RBI being Short forward Dollars to the tune of over $100B, the highest ever. Within this, $50B Short forwards are maturing in less than a year.

FCNR(B) scheme for the NRIs, which pulled $56B across all channels, shuts on August 31. This would then become a stock, eventually will have to be paid back with interest. This has given some push to the $ reserves helping cross $700B again. Gross though. Net of Short forwards, the number reduces.

The road ahead looks tough, until and unless USD/INR breaks outside the channel, which would mean the depreciation spree breaks down. This can tentatively happen below 94. Quite on the contrary to comfort, USD/INR is yet again testing and resting just above the lower band of regression channel, from where there still seems to have higher odds of a continuation upwards.

To watch: whether USD/INR honors the channel and continues to depreciate or breaks outside the regression channel and finally appreciates. August 31 gives both answers at once, since the July forward book prints the same day the FCNR(B) window shuts.

The wind tells the sailor which way the tide is turning, long before the tide itself becomes visible.

Microcaps have been leading the rally among Large - Mid - Small and Microcaps since March lows, and the index is up by 40% already. The index has now retraced all the way back to its December 2024 levels and is standing just below its previous All Time High. This puts Microcaps at a crucial juncture, with a breakout potentially taking the index into uncharted territory.

The Inflection point

The index is now at inflection point from where, theoretically speaking, it can either Breakout and continue the rally into the uncharted territory or Breakdown and remain into the corrective range it has been since Dec’24.

A factor unique to India:

In Developed Markets, the usual observation is that Large Caps tend to lead the early stages of a sustained rally, with participation broadening towards the higher beta segments as the cycle matures.

India has historically shown a rather different character.

Over the last 15-18 years of observation, Small and Microcaps have frequently been among the leaders of major Market rallies. Their higher beta makes them more sensitive to changes in liquidity, risk appetite and speculation.

That makes their relative outperformance an important piece of information when assessing the broader market regime.

The Tell

Microcaps outperformance, as clearly depicted by the MicroCap Index / Nifty 50 ratio chart (lower panel) has already begun to cross past the Dec’24 High point. This leading aspect can be the first sign that seems to be raising the odds of a breakout.

Caveat: Microcaps can deliver some of the most powerful moves when risk appetite expands, but they also carry considerably higher downside risk when the tide turns. The same leverage to euphoria that creates extraordinary upside can magnify the fall during panic.

To watch: the index level itself for the final confirmation

Since March, when the much held Support of 2025 broke, NIFTY has been attempting to cross the zone back up with Two attempts already and Third in the making. The recent pullback and not a pierce through has raised several questions with primary being if this attempt has failed as well and pressing it on further if there’s a reversal in order.

Volume: The Great Differentiator

Since the Lows of March, with its attempts to cross over the Now Resistance of Earlier Support (read polarity), NIFTY has been making an Ascending Triangle. The very recent pullback from the resistance, while has brought the prices lower, the volumes have been declining as well.

Conceptually, if price pulls back from a resistance level with lower than average volumes, that is usually not referred to as reversal. Until, price continues to break with lower lows with expanding range along with increasing volumes.

The current case is honouring much of it. With neither price range expanding on bearish candles cracking with lower lows nor volumes expanding.

So far, NIFTY has held the odds of this pullback being only of reluctance before the potential crossover. One still needs to keep an eye on changing dynamics of Market structure.

Additionally, Broader Market’s Breadth has been quite positive, tilting the odds in favour of a potential breakout.

Irrespective, it ain’t done till it’s done.

To watch: the shaded polarity zone

When a pendulum travels far from its equilibrium, the pull from the other end begins.

The flagship indexes of US and Europe (Dow Jones Industrials and Euro Stoxx 50) are now within the upper bands of regression channels respectively.

In normal circumstances, Normal Distribution works. Regression Channel plots a central line, which is the Line of Best Fit based on least squares regression method. On the sides are Standard Deviation channels. In the charts, there are 2 and 3 standard deviation channels, above and below the line of best fit. The Line of Best Fit works as a Mean, with channels as Volatility Boundaries – in absence of any outlier events that may cause fat tails.

For the lack of any significant event that may cause an upward breakout, both these indexes then have a probability of a pullback to the central Line of Best Fit at least, if not the other end of the regression channel. Be it in the form of sideways time corrective or a price pullback. If it’s aided by a negative catalyst, then the price moves happen that much faster.

Howsoever, it’s still never wise to just act based on indexes being stretched. One must wait for a subtle signal that underscores a potential change in the undercurrent before it becomes a drumbeat.

To watch: Any candlestick bearish reversal pattern formation on Dow Jones Industrials and Euro Stoxx 50 on the weekly timeframe at least (or above).

Bond Markets in Japan were anyways moving ahead of the curve by demanding Higher Yields at the front end of the Yield Curve using the simple math of real rates, as Japan has been running Negative real rates for years now, with higher on ground inflation against a BoJ policy rate of just 1%. This has become messier and brought Bond Markets to the edge with the recent intervention. While the Bond Markets have been, in a way, asking for higher policy rates, the recent intervention by Japan’s Ministry of Finance (along with BoJ) with the US Treasury has sent wrong signals to the Market.

An artificial suppression of policy rates, just so as to keep the Yen Carry Trade alive, for US Equities along with the World Markets to not have any adverse impact can only last so long. The fragility in this approach that has a short shelf life is what has brought Markets to the edge of the seat pushing Yields further higher. The current sharp rise in Yields is Markets way of expressing that the rate hikes that were earlier eventual, are now imminent.

The path, however, is not so smooth. Any rate hikes impact the Yen Carry Trade. Rising cost of funds can force unwinds. This can potentially rattle the Markets. Case in point: 5th August, 2024.

The Math stands like this:

BoJ Policy rate (overnight): 1%

Headline inflation: 2%

1 Year JGB Yield: 1.39%

2 Year JGB Yield: 1.60%

To watch: September Bank of Japan Meet and interest rate decision.

One of the first most basic questions that any investor asks is which asset to invest in - Stocks or Bonds? With due considerations to relative safety and probable reward.

To solve this puzzle, let’s have a meticulous look at two independent indexes: Nifty 50 vs Nifty Government Security Composite Index, whereby the latter is a representative of safety and coupon interest that one can earn at any point of time by investing in Government Securities and the former needs no introduction.

Now, take it one step further: create a ratio chart of Nifty 50 / Nifty GSComposite Index [White]. A rising ratio line would imply Nifty 50 outperforming the Government Securities rewarding the risk, whereas the falling one would make it clear that keeping money in GSecs is far safer than Equities.

The hindsight information is good, but the bigger question always is: what may perhaps happen in the future?

There can be several approaches within the gamut of Technical Analysis to create future projections and probabilities for such scenarios. Plotted on the chart is one such study: Hurst Time Cycle. Sine Waves in Orange for larger significant Cycle and Blue for the intermediate one.

The idea is to invest in Equities whenever there’s a potential Trough, from where the Time Cycle is projecting a possibility of a bounce. During which period Equities are then expected to outperform the GSecs.

The current Time Cycles have been plotted from 2020 Lows, as Markets now stand in a new regime.

One of the innate qualities of Hurst Time Cycle is that it further projects the Next potential Trough, if the previous ones are broadly synchronised.

The recent Trough in both Orange (larger) and Blue (smaller) Time Cycle are indicative and supportive of Equities over Government Securities.

The Dice is in the Air, only Time will tell where it lands.

Caveat: Time Cycles are best used for Context and probable scenarios that may unfold. For better results and timing, they should be combined with other Technical studies.

Copper has been hitting fresh All Time Highs on LME and Comex, while it’s on the verge and dealing with the neckline / zone of Cup and Handle formation on MCX.

Copper’s cycle took an upturn in 2025, when the AI Data centers picked up along with EV’s. Prices are already up by over 50% in a year with another breakout zone being tested right in front of us.

So, what’s causing this sudden incremental demand?

For one, it’s the EV’s. A regular petrol car requires some 23-25 kilos of Copper, whereas an EV needs between 80-85 kilos per car. Now multiply the difference by the fact that over 1 Million EV’s were sold in 2025, with further higher projections for 2026.

Two, it’s the AI Data Centers. A reasonable estimate is 27-33 Tonnes of Copper per MW of Data Center. The large data centers in 2023-2025 were mostly within the capacity of 100-500 MW, as against now where the Data Centers’ capacity on an average is between 1-5 GW.

If on one hand, the Demand is seeing a structural rise, Supply is constant and at the risk of getting constrained.

Democratic Republic of Congo banned copper and cobalt concentrate exports. Indonesia’s concentrate export ban has been in place since January 2025.

New Mines take time, anywhere between 17-29 years.

While dealing with the multitude of chaos, the one who gets impacted the most is the price.

To watch: The Neckline / Zone of Cup and Handle formation on Copper INR.

Indian 10-Year GSec yields have been compressing into a Symmetrical Triangle with 23 years in the making through consecutive Higher Lows and Lower Highs since 2003. This is now reaching an Apex from where the large-scale Breakout is impending.

This could be the most watched-out event for the Indian Bond Markets in decades, and can either make or mar the fortunes across asset classes.

The fundamentals that will determine the direction:

1. Inflation
CPI rose to 4.38% in June 2026, the first breach of the 4% target in 16 months, and the RBI now projects FY27 at 5.0% with Q3 at 5.9%.

2. Policy
The repo was held at 5.25% on 5 August with a neutral stance, the easing cycle effectively exhausted and some desks already pricing hikes.

3. Supply
FY27 gross borrowing stands at a record ₹17.2 lakh crore, up 16%, though the fiscal deficit narrows to 4.3% of GDP. Money Supply (M3) stands at All Time Highs with ₹318 Lac Crores, up by 13% YoY.

4. External
Brent swung from $70 to above $100 and back to below $80 on Hormuz talks, with the rupee near 95 after touching record lows.

5. Flows
Bloomberg deferred index inclusion, and the India 10 Year minus US 10 Year Yield spread has thinned to about 215 basis points against a historical 400 plus.

The weight of evidence is tilting towards Higher Yields for now, unless the Macro inputs shift materially from here.

To watch: The changes in the Macro factors as stated above, along with the Yield levels.

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Auto Index has broken out to New All Time Highs, breaking above the neckline / zone of Cup & Handle formation. While that itself is reason enough to take it seriously as Nifty is still lingering way below its All Time Highs, that’s not even half the story and the real substance is as below:

On 27th September 2024, when NIFTY made a high of 26,277, it closed at 26,179. On that day, Auto Index was 27,610.

The Auto Index / Nifty 50 ratio was then = 27610/26179 = 1.05

Today that same ratio is 1.19. Auto Index = 29,411 and Nifty = 24,624.

While Nifty has corrected from 26277 to 24624, Auto Index has climbed from 27610 to 29411.

This is the second and a stronger reason for calling this a significant breakout. An ordinary eye might miss what a massive change has happened underneath.

An index breakout along with breakout on the ratio charts is among powerful breakouts under the overarching Momentum category.

As per William O’Neil who devised Cup and Handle Pattern in 1988: A price Target for C&H cases is derived as Target one being the depth of handle replicated on the upside and Target Two being the depth of Cup itself. In this case, the depth of handle is about 5000 points and roughly 18%. That’s a probability now.

Caveat: These price Targets are probable in nature and as per the 2007 Encyclopedia of Patterns by Thomas Bulkowski, this pattern has approximately 65-70% probability of success. A better stance is to always keep a Trailing Stop via a Moving Average or Super Trend, in case the index flips.

Japan’s Ministry of Finance (along with Bank of Japan) recently stepped in to support the Japanese Yen that had depreciated to 164, the lowest level in 40 years. Japan sold $59 Billion and bought Yen. Incidentally, and this is where the case gets interesting, this operation was executed by the US Treasury’s Exchange Stabilization Fund.

Not only that, US is now facilitating their FIMA repo facility for such future interventions to Japan.

This raises Multiple questions: why is Yen depreciating at this pace? why did US help Japan in this operation and, what are they getting out of it?

Yen’s depreciation is a structural problem. The real rates are negative in Japan, that’s causing currency depreciation. Logically, Bank of Japan must raise rates to reduce the Gap and curb the slide. Irrespective, they chose intervention. It’s here US comes into the picture.

If Japan raises rates: That can impact the Yen Carry Trade. Much of funds raised from Japan at low rates find their way into US Markets. So raising rates can force the unwind of Trades in the US, thereby potentially causing a crash in the US Markets. Hence, intervention it is.

Secondly, why FIMA? Japan holds over $1 Trillion US Treasury Bonds. If Japan sells those to Buy Yen, then that raises US Treasury Yields, putting the pressure on the US Government. Therefore: FIMA (Foreign and International Monetary Authorities) repo facility is extended by the US, where Japan can pledge their US Treasuries and borrow US Dollars in order to sell them in Open Market for buying of Yen. The US Dollars they can later return with interest.

This helps US to manage both aspects: That Yen Carry Trade continues and US Treasury Yields remains controlled as well.