By Rahul Shah
Markets continued to be in grips of bears, equity benchmark index ended lower for the second consecutive week on June 17 and also posted their biggest weekly loss since May 2020 as global inflation worries lead to monetary policy tightening by central banks. High inflation, rising interest rates and growing concerns about corporate profits and economic growth are major concerns in the global market. Sensex shed 2,943 points (5.40 percent) to close at 51,360.42, while the Nifty fell 908 points (5.6 percent) to end at 15,293. Sensex lost nearly 8% or 4400 in the last ten trading sessions. There was across the board-based selling in the market.
Concern of higher oil price, continued FIIs selling, delay monsoon and mixed bag macro data have dampened the market sentiment. Nifty metal Index nosedived 12% on account of soft global demand and the government-imposed import duty. Foreign investors have already sold stocks worth around Rs 1.9 lakh crore so far in 2022 while this week sold nearly Rs 24,000 crore or $3.5bn. FIIs are also expected to maintain their selling spree with the central banks’ policy tone pointing towards continued rate hikes of higher magnitude.
China’s interest rate decision (Monday) would be important triggers for the markets. On the domestic front, the COVID trend and the progress of the monsoon will also be in focus. Undertone of the market continued to remain bearish with weak global cues dampening investors’ sentiment. Investors are trading with caution after the aggressive rate hike by the US Fed. Inflation has soared to 40-year high in the US, forcing the Federal Reserve to hike interest rates. The Fed on Wednesday raised its key rate by 75 basis points and officials outlined a faster pace of rate hikes.
In Europe, the Swiss National Bank on Thursday unexpectedly increased rates by 50bps for the first time in 15 years, while the Bank of England raised its lending rate by 25bps 1.25% to its highest since 2009 and cautioned more may be to come. The domestic market will continue to trade with high volatility in the near term, however, the ongoing corrections are opportunities in disguise on a medium to long-term investments. In India as well, retail inflation is at 7.09 per cent, while WPI remained in double digits for 14 straight months. This forced the RBI to hike interest rates by 90 bps in the last 2 months, thereby making investors jittery.
Market has been in a sharp down trend over the last 14-15 sessions. Minor consolidations or small upside bounces have resulted in a sharp weakness as of now. Hence, any upside bounce from here could be a sell on rise opportunity for the short term. On the higher side, the area of 15,600 is expected to be a crucial overhead resistance ahead and is unlikely to be broken on the upside in a hurry. After a small upside bounce, the Nifty could slide down to the 15,000-14,800 levels in the near term. If Nifty hits 14,882 mark, then it would be regarded as a bear market. However, a slip below the 15,000 mark is also a key psychological level to watch out for.
SL: Rs 835, Target price: Rs 750
Indusind Bank has given major breakdown on daily and weekly chart and closed below the same. It is continuously forming lower lows from past five trading sessions and resistance is gradually shifting lower. RSI has also given breakdown on daily and weekly scale. • Considering the current chart structure, we advise traders to sell the stock for a down move towards 750 with a stop loss at 835
TVS Motors Company
SL: Rs 725, Target price: Rs 800
TVS Motors has been holding well above its 20 day moving average on the daily scale indicating that the uptrend is intact. It is resilience in spite of weakness in global and broader market indicating overall strength in the counter. Momentum oscillator RSI is also positively placed on the daily and weekly scale. • Considering the current chart structure, we advise traders to buy the stock for an up move towards 800 with a stop loss of 725.
(Rahul Shah is a Senior Vice President, Group Advisory Leader-PCG, Broking & Distribution, Motilal Oswal Financial Services. Views expressed are the author’s own. Please consult your financial advisor before investing.)