It’s a sea of red across Dalal Street with all the major indices closing in the red. The Fed impact was well and truly reflected the way the markets sold off last week’s gains. The Nifty closed below the 20,000 mark at 19,679, down almost a per cent. The Sensex too closed well below 67,000 at 66,230.24, down a whopping 500 plus points. Some of the key stars of last week like banks, autos and PSU entities saw broadbased selling.
Vinod Nair, Head of Research at Geojit Financial Services said “Domestic market declined following a hawkish stance by the Fed chair and prolonged high interest rate trajectory which is not positive for a slowing global economy. PSU Banks and Mid & Smallcaps were the worst hit due to stretched valuations and concern over moderation in yields. Rising oil prices and erratic rainfall further led investors to stay cautious in the market.”
Technical Outlook
Market observers believe that the 19,600 level will act as a floor for Nifty. Jatin Gedia Technical Research Analyst at Sharekhan by BNP Paribas said, “ On the daily charts we can observe that the Nifty is in the process of retracing the rise it has witnessed 19223 – 20222. It has now reached the zone of 19720 – 19680 where support in the form of the 20-day moving average and the 50% Fibonacci retracement level is placed. We expect Nifty to hold on to this support and provide a pullback. The daily momentum indicator today has provided a negative crossover which is a sell signal and is now in sync with the price action. In terms of levels, 19680 – 19604 is the crucial support zone while 19850 – 19900 shall act as an immediate hurdle zone.”
The Bank Nifty saw sharp correction today and, in the process, has breached the 20- and 40-day moving averages. Gedia explains that this is a sign of weakness. “The daily momentum indicator has a negative crossover which is a sell signal. thus, both price and momentum indicators are suggesting a further decline. On the downside we expect it to target levels of 44500 – 44360 which coincides with the 20 week moving average and the 78.6% fibonacci retracement level.”
The top Index losers list includes the likes of M&M, Hero MotoCorp, Cipla, State Bank of India, IndusInd Bank. However, select Adani Group companies bucked the trend and gained nearly a percent.
Ajit Mishra, SVP – Technical Research, Religare Broking said, “Nifty has tested the short-term moving i.e. 20 EMA and also retraced almost fifty percent of the recent up move. It may take a breather now but the upside seems capped citing the underperformance of select heavyweights. We thus recommend staying stock-specific with a focus on risk management. “
The rupee closed at 83.06.