Indian benchmark equity indices NSE Nifty and BSE Sensex ended in red, furthering losses amid volatility as bulls-bears tussle. Nifty gave up the 18,300 level, ending at 18,269 while Sensex ended 450 points lower at 61,337. The Nifty 50 index slumped 2.1% over the course of the two previous sessions. The broader markets and sectoral indices also closed in the red, with Nifty PSU Bank down 2.92%. Adani Ports, M&M, BPCL, Asian Paints and Dr Reddy’s were Nifty’s top losers, with Adani Ports losing 2.83%. “Global markets extended their rout as the ECB and BoE followed the Fed in raising policy rates by half a percent while maintaining a hawkish tone on inflation. The aggressiveness of central banks in combating inflation has raised concerns about the global economy’s health. Despite attempts to recoup losses, a lack of global support pushed the indices back into negative territory,” Vinod Nair, Head of Research, Geojit Financial Services.
Deepak Jasani, Head of Retail Research, HDFC Securities
Nifty fell for the second consecutive session on 16 December pulled down by weak global cues. Large day end trades resulted in volumes touching a multi week high. Nifty finally closed 0.79% or 145.9 points lower at 18,269. Broad market indices fell even more as the advance decline ratio remained low at 0.49:1. The IT sector continued to face selling pressure as Nasdaq kept getting sold off. Realty stocks came under selling pressure as rising rates could dampen demand for properties. Global markets were largely down as investors were worried that the resolve of central banks to continue their fight against inflation could tip the economy into a recession. Nifty lost 1.23% over the week and looks set to continue its downmove. The 18,088-18,133 band is the next support while 18,442 could be tough to breach in the near term.
Sameet Chavan, Chief Analyst-Technical and Derivatives, Angel One
The benchmark index Nifty has now sneaked below the key swing low of 18,350 on a closing basis. Ideally looking at the price structure, the development does not augur well for the bulls. A close below this support opens the possibility of extended correction in the coming week. We may be biased, but we are still not convinced with this close. Only a follow through selling may lead to further weakness towards 18,130 – 18,000 – 17,900 in coming sessions. Even if this scenario pans out, we do not expect the correction to aggravate below the lower end of this support range. The higher degree up trend remains intact as long as we manage to hold this. Since the market was deeply overbought, we must consider this as a running correction. On the flipside, 18,450 – 18,600 are to be treated as immediate hurdles. If bulls have to regain their strength, 18,450 needs to be surpassed with some authority, which will negate the breakdown from the small ‘Head and Shoulder’ pattern on daily time frame charts.
Traders are advised to stay light for a while. Let either market complete its correction first or reclaim key levels on the upside to resume the bullish trend. First half of the forthcoming week would be quite crucial for our markets. Let’s see how the global market behaves and hopefully, there is no major aberration on the global front.
Amol Athawale, Deputy Vice President – Technical Research, Kotak Securities
The risk-off sentiment continued on Dalal Street as the US Fed’s hawkish comment-induced global correction gave local investors the reason to further reduce their equity exposure. Foreign investor selling seemed to have once again gathered pace, which is reflecting badly on local stocks in the last few sessions. While there was no respite from the bears, Dow Futures witnessing a steep fall dampened the market sentiment leading to a broad-based selling. Technically, lower top formation on daily charts and double top reversal formation on intraday charts is indicating further downside from the current levels. In addition, the Nifty not only broke the important support level of 18,400 but closed below the same. The next support level for the index would be the 50 day SMA or 18,100-18,000 levels. On the flip side, 18,400 could act as an immediate resistance zone for the index, and above the same the index could retest the 20 day SMA or 18,550. In case of further upside, the index could move up to 18,700.
Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services
Markets seem to have taken pause after making new highs with Nifty down by 3% in the last few days. Markets are likely to remain in consolidative range due to lack of triggers in the near term. Also lower participation from institutional investors due to upcoming year-end holidays would keep the markets lackluster. Though investors would keep eye on US Home Sales and GDP (QoQ) numbers to be released next week. On the sectoral front, sugar stocks are likely to remain in limelight after news reported, government might consider increasing sugar export quota for the current 2022-23. However, some selling might be seen in Banking stock especially in PSU banks on account of profit booking after the sharp rally in the last few months.