Sensex falls 1% day ahead of RBI policy outcome, Nifty below 16500 may fall to 16300; bears clutch D-Street

BSE Sensex and Nifty 50 ended a per cent lower on Tuesday on the back of profit booking a day ahead of RBI’s monetary policy decision due on 8 June.

BSE Sensex, Nifty 50, stock market
After gaining about 0.6% intra-day, both the Sensex and Nifty50 closed 0.4% lower. RIL declined nearly 2% to end at Rs 2,724.05 on the NSE.

BSE Sensex and Nifty 50 ended a per cent lower on Tuesday on the back of profit booking a day ahead of RBI’s monetary policy decision due on 8 June. BSE Sensex ended 593 points or 1.02 per cent down at 55,107, while NSE Nifty 50 index fell 153 points or 0.92% to end the day at 16,416. Index heavyweights such as Infosys, ICICI Bank, Tata Consultancy Services (TCS), HDFC Bank, Hindustan Unilever Ltd (HUL), and Titan Company among others contributed the most to the indices fall. Broader markets too fell in Tuesday’s session. S&P BSE Midcap index fell 0.8 per cent or 175.36 points to end at 22,564, while S&P BSE Smallcap index was down 0.7 per cent or 175 points to shut shop at 26,065. India VIX, the volatility index, was up 1.1 per cent to finish at 20.43 levels. On the sectoral front, Nifty Bank index fell nearly 1 per cent to settle at 34,996 levels.

Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities

Investors are in a wait and watch mood ahead of the RBI’s credit policy announcement, although several economists believe the MPC will hike rates further to tame inflation. The market has simply borne the brunt of unabated FII selling, which continues to desert Indian equities amid weakening rupee and strengthening dollar. Technically, the Nifty broke the important support level of 16450 and closed below the same which is largely negative. In addition, the index has also formed a bearish candle indicating short-term weakness. For traders, as long as the index is trading below 16500 the short term texture remains weak, below which the correction wave is likely to continue till 16300. Any further correction could drag the index up to 16225. On the other hand, above 16500, there are chances the index could hit 16600-16650.

Kunal Shah, Senior Technical & Derivative Analyst, LKP Securities

The Nifty Bears took control once again leading to a fall in the index towards the crucial support zone 16,400-16,350. The volatility is likely to continue ahead of the RBI policy and a clear-cut direction will be visible post the outcome. The upside resistance is placed at the 16,600-16,800 zone where heavy call writing is visible. The Bank Nifty index continues to witness selling pressure ahead of the RBI policy and ends on a negative note. The index is stuck in a broad range between 34,500-36,000 levels and a break on either side will lead to further trending action. The undertone remains weak as long as it stays below the level of 36,000 where the highest open interest is built up on the call side.

Vinod Nair, Head of Research, Geojit Financial Services

The volatility in the market is forcing investors to stay sidelined ahead of the RBI’s policy announcement. The market has factored a hike up to 50bps of repo rate & CRR, but any further stricter measures to clamp liquidity due to lingering inflation will have ramifications on the market trend. Apart from the monetary measures, the RBI’s guidance on growth and inflation forecast will determine the market trend.

Palak Kothari, Research Associate, Choice Broking

On technical front, the Nifty has formed Bearish candle & given closing below horizontal support line on daily time frame which suggest downside movement in the counter. From the last three trading sessions, Nifty has been trading with a higher low & lower low formation which points out weakness in the trend. Nifty has given closing below 200-Hourly Moving Average which indicates sustain below the same can show downside moment in the counter. The momentum indicators Stochastic was trading with a negative crossover as well as reversed from the overbought zone on a daily chart which suggest a southward journey in the counter. The Nifty may find support around 16300 levels, breaching below the same can show 16200-16100 levels while on the upside 16500 may act as an immediate hurdle. On the other hand, Bank nifty has support at 34500 levels while resistance at 35500 levels. Overall, Nifty is showing weakness on a chart, breaching below 16350 level can create more panic and index can test 16100 -16200 level.

Mohit Nigam, Head – PMS, Hem Securities

On the technical front, the key resistance levels for Nifty50 are 16600 and on the downside 16350 can act as strong support. Key resistance and support levels for Bank Nifty are 35500 and 34700 respectively.

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