BSE Sensex and NSE Nifty 50 extended the sell-off to the fifth straight session on Monday on the back of weak global sentiment amid concerns over inflation and monetary policy tightening. Analysts say that rising oil prices, the monthly expiry of January month derivatives contract, and the run-up to the Union Budget 2022 have also induced choppiness in the markets. During intraday deals BSE Sensex crashed over 2,000 points or 3.5 to 56,984 on Monday, while Nifty 50 plunged over 500 points or 3.5 per cent to 16,998. Long term investors can look to enter the markets at these levels, an analyst said. At close, BSE Sensex ended 1,546 points or 2.6 per cent lower at 57,492, while NSE Nifty declined 468 points or 2.7 per cent to settle at 17,149.
What’s dragging Sensex, Nifty: Where will Indian share markets go from here?
FPIs sell-off, inflation, rising crude oil prices: Ravi Singh, VP & Head of Research, Share India Securities, told Financial Express Online that a host of factors such as foreign Institutional Investors (FIIs) pulling out money from the Indian markets, global inflation as crude oil prices have been shooting up from last few months which has shown negative effect on the financial markets, upcoming five state assembly elections and budget presentation, and fiscal tightening by various central banks were dragging the BSE Sensex and Nifty. Singh added that with Omicron COVID cases possibly peaking is a positive sign for the recovery of the economy.
Nifty technical: However, the selling pressure may continue till Thursday this week and if Nifty closes below 17200 then it may further go down till 16800 levels.
Rate hike worries, US Fed speech: Milan Vaishnav, CMT, MSTA, Consulting Technical Analyst and founder, Gemstone Equity Research & Advisory Services, said it would be crucial to see if these supports are defended. He added that Indian markets were dragged down by inflation or rake hike worries; and US Fed speech this week will be important. However, given the ferocity of the down move, it also makes a good base for some pre-budget run-up from here.
Nifty technical: The sell-off has continued for the fifth day in a row; Nifty has lost over 1200 points from its 1800+ points of technical pullback. “However, on the short term charts, the selling seems overdone and we may see some technical pullback even if there is no major change in the directional consensus,” he said. Vaishnav added that Nifty has strong support at 17200 in the form of a trend line. This trendline begins from the top of 18600 and joins the subsequent lower top. “In any case, maintaining 17200 for Nifty and 56000-56500 for Sensex will be crucial,” Vaishnav told Financial Express Online.
Hawkish Fed, weak global cues: Gaurav Garg, Head of Research at CapitalVia Global Research, said that bears continued to maintain a strong hold in Indian markets as domestic markets were taking cues and following their global peers. Garg also added that inflation concerns and hawkish Fed appear to be the major reasons leading to pessimistic approach of investors. With the economy returning to normalcy, inflation, which has risen globally owing to supply chain issues, is expected to cool.
Nifty, Bank Nifty technicals: “After the recent correction, 16900-17050 appears to be an immediate support zone for Nifty followed by 16700. While 18400 appears to be the resistance zone on the higher side. 35500 is the immediate support zone for Bank Nifty followed by 34000. It is likely to face resistance around 38200 in the near term,” he told Financial Express Online.
Run-up to Budget 2022, geopolitical tensions: Kranthi Bathini, Director equity strategy, Wealthmills Securities, said that Indian markets were under selling pressure due to weak global cues and domestic investors were in a wait and watch mode ahead of upcoming Union Budget 2022. FPIs seem to eye the US Federal Reserve decisions and geopolitical issues between Russia and Ukraine. “It is a good entry level for long term investors to enter Indian markets in a staggered manner,” Bathini advised investors.
Today’s stock market closing: What to expect from Tuesday’s trade?
Devang Mehta, Head – Equity Advisory, Centrum Wealth, said that markets have been correcting in the last few days on the back of fears of interest rate hikes across the developed economies plus the ongoing tapering of stimulus. Though the covid numbers are still something to ponder on, but omicron variant not being as severe has made market believe that the days of easy liquidity seem to be nearing an end. Nasdaq has corrected by around 14 percent which has taken the sheen away from very good IT numbers & guidance locally. More than index correction this round of volatility has made lot of good businesses correct, which should ideally be utilized as an opportunity in adversity. An approach to buy quality franchisees and market leading businesses gradually or in tranches will ensure that you take advantage of volatility, as we approach the Union Budget amidst the ongoing third quarter result season.
Rupak De, Senior Technical Analyst, LKP Securities said that Indian equities witnessed a sharp decline as the benchmark Nifty fell by more than 500 points on Monday. During the day bears breached crucial support levels in Nifty without any fights from the bulls. Moreover, momentum indicator remained in a bearish crossover on the daily chart. Going forward, the index is likely to remain weak. However, sustained trade above 17150 may induce a relief rally in the market. On the other hand, fall below 17150 may trigger correction towards 17000/16820.
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