Bears are likely to maintain control over Dalal Street on Thursday amid weak global cues, following US Fed’s 75 bps rate hike decision. Investors will remain cautious ahead of RBI off-cycle MPC meeting. According to analysts, global and domestic developments such as FOMC, RBI MPC meetings will dictate the near-term trend in markets. “On daily charts, the Nifty has formed a small bearish candle with double top formation on intraday charts. For the index, 18000 and 17950 would act as key support zones while 18200-18250 would be the immediate hurdle,” said Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities.
Key things to know before market opening bell
Global market watch: US stocks ended sharply lower on Wednesday, as comments from Fed Chair Jerome Powell shattered initial optimism over a Fed policy statement that raised interest rates by 75bps but signalled that smaller rate hikes may be on the horizon. The Dow Jones Industrial Average fell 1.55%, the S&P 500 lost 2.50%, and the Nasdaq Composite dropped 3.36%. Shares in the Asia-Pacific dropped on Thursday, tracking Wall Street losses. Hong Kong’s Hang Seng index fell 2.41%, Mainland China’s Shanghai Composite lost 0.11%. South Korea’s Kospi fell 0.66% and the Japanese market was closed for a holiday Thursday. The MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 1.3%.
Nifty technical view: After showing sharp upside momentum in the last couple of sessions, Nifty slipped into moderate weakness amidst range movement on Wednesday and closed the day lower by 62 points. “A reasonable negative candle was formed on the daily chart, beside the positive candle of the previous session. Technically, this pattern indicates a formation of bearish engulfing, but not a classical one. This could mean emergence of minor selling pressure from near 18150-18200 levels,” said Nagaraj Shetti, Technical Research Analyst, HDFC Securities.
“Though Nifty declined slightly from the highs, the short-term uptrend status remains intact. Sharp weakness from near the hurdle of 18100-18200 is missing. The positive chart pattern like higher tops and bottoms of smaller degree is continued as per daily chart and further consolidation or minor downward correction from here could open a possibility of higher bottom formation at the lows,” he added.
Levels to watch for: “Technically, the daily chart of Nifty exhibits a bearish candle. From a short to medium-term view, the index may experience some profit booking till resistance zone 18180-18200 is crossed on a closing basis. 17850-19000 will serve as a short-term support range on the downside. On the other hand, Bank nifty has support at 40500 levels while resistance is placed at 41700 levels. Short-term traders may find themselves in a situation where they need to hold a hedged position to protect themselves in the event of a panic. Also we believe investors with tolerance for intermittent volatility and 2-3 months horizon may consider decent returns in mid-cap categories,” said Om Mehra, Technical Associate, Choice Broking.
Fed hikes rate by 75 bps: The Federal Reserve pumped up its benchmark interest rate on Wednesday by three-quarters of a point for a fourth straight time but hinted that it could soon reduce the size of its rate hikes. The Fed’s move raised its key short-term rate to a range of 3.75% to 4%, its highest level in 15 years. It was the central bank’s sixth rate hike this year. But in a statement, the Fed suggested that it could soon shift to a more deliberate pace of rate increases. It said that in coming months, it would consider the cumulative impact of its large rate hikes on the economy. It noted that its rate hikes take time to fully affect growth and inflation.
IPO Watch: Two IPOs are set to hit Dalal Street on 3 November. Bikaji Foods International is all set to open its Rs 881 crore initial public offering (IPO) on Thursday. The issue will close on 7 November (Monday). The price band of the IPO is set at Rs 285-300 a share. Meanwhile, the Rs 2,206 crore IPO of Medanta Operator Global Health Ltd will also open on 3 November. Ahead of the IPO, the company garnered Rs 662 crore from anchor investors. Global Health has set a price band of Rs 319-336 per equity share of face value Rs 2 each.
FII and DII data: Foreign institutional investors (FIIs) net bought shares worth Rs 1,436.30 crore, whereas domestic institutional investors (DIIs) net offloaded equities worth Rs 1,378.12 crore on 2 November, according to the provisional data available on the NSE.
Stocks under F&O ban on NSE: The NSE has added LIC Housing Finance and retained Punjab National Bank under its F&O ban list for 3 November. Securities thus banned under the F&O segment include companies where derivative contracts have crossed 95% of the market-wide position limit.