Weakness in global market weighs on investor sentiment, limit leveraged positions; Nifty resistance at 17250

As global cues deteriorated, markets have resumed their corrective tone as they are weighed down by souring sentiments.

share markets
The banking index has plunged sharply in the recent down leg, after the failed attempt to cross the previous swing high i.e. 41,979 levels.

By Ajit Mishra

With the deterioration of global cues, markets have resumed the corrective tone in the last two weeks. The benchmark indices are down over 10% from the record high and there’s no sign of a reversal yet. On the benchmark front, Nifty has plunged sharply from 17,800 to a recent low of 16,828 in this prevailing leg of down move and currently trading at 16,988.40 levels. Out of the Nifty 50 basket, over 30 stocks are trading over the long term moving average (200 EMA) which clearly shows that the decline is widespread. Majorly, weakness in the global markets especially the US is weighing on the sentiment. 

Going ahead, global cues will continue to drive the markets, in absence of any major event on the local front. Earlier, the banking and financials were capping the damage but now the selling pressure is widespread. However, resilience in the PSE basket is still offering some respite. Interestingly, the broader indices have been showing tremendous strength in the recent fall however the participation is restricted.

It’s difficult for a trader to navigate amid mixed indications. And, we feel the ideal approach is to limit leveraged positions and let the markets stabilise. We have highlighted key supports and resistances for both Nifty and the banking index along with a list of stocks. Participants should plan their positions accordingly.

Nifty (CMP: 16,988.40)

Nifty may take a breather initially however the upside also seems capped. It could face hurdles around the 17,250-17,400 zone while the 16,600-16,800 zone would provide the needed cushion, in case the situation deteriorates further. 

Bank Nifty (CMP: 39,361.45)

The banking index has plunged sharply in the recent down leg, after the failed attempt to cross the previous swing high i.e. 41,979 levels. It has slipped below the budget day low i.e. 39,400 levels of late and currently trading below major moving averages. For any meaningful recovery, it should decisively cross 40,000 levels then the next hurdle would be around the 40,900-41,800 zone. In case of further fall, the 38,000-38,450 zone would be critical. Since we’re seeing a mixed trend within the private banking space and the PSU pack is also trading subdued, the focus should be on stocks that are showing relatively higher strength and accumulate them gradually during this phase. 

Stocks to Watch

Bullish: BPCL, DLF, IOC, Godrej, MGL, Prestige, Pidilitind

Bearish: Aubank, IRCTC, Lupin, SBIN, Tata Steel, UPL, VEDL

(Ajit Mishra, VP- Technical Research, Religare Broking. Views expressed are author’s own. Please consult your financial advisor before investing.)

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First published on: 21-03-2023 at 10:31 IST
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