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Will Sensex, Nifty rebound or continue their downward move? 5 things to know before opening bell

Entering the weekly futures & options expiry session, SGX Nifty was up with gains, suggesting a rebound on Dalal Street.

With the Nifty 50 falling on Wednesday, a long bear candle was formed on the daily chart, analysts said. (Image: REUTERS)

Domestic equity markets nosedived on Wednesday after the Reserve Bank of India announced an unexpected off-cycle 40 basis point rate hike. S&P BSE Sensex tanked 2.29% or 1306 points to settle at 55,669 while the NSE Nifty 50 index plummeted 391 points or 2.29% to end the day at 16,677. Broader markets mirrored the fall and volatility rose higher. Entering the weekly futures & options expiry session, SGX Nifty was up with gains, suggesting a rebound on Dalal Street. Global cues were also positive after Wall Street staged a sharp up-move.

Rate hike cycle commences: The Reserve Bank of India (RBI) on Wednesday announced a 40 basis point rate hike in an unscheduled meeting of the MPC. This came just ahead of the US Federal Reserve’s meeting, where it raised rates by 50 basis points. RBI Governor Shaktikanta Das yesterday said that yesterday’s policy decision has been to curb rising inflation.

Global Watch: On Wall Street, stock markets rallied after the US Federal Reserve raised rates. NASDAQ soared 3.19%, followed by a 2.99% rally in S&P 500 and a 2.81% jump in the Dow Jones. Shanghai Composite was up with gains on Thursday morning along with Hang Seng while other major Asian markets remained closed. 

What do the charts say: With the Nifty 50 falling on Wednesday, a long bear candle was formed on the daily chart, that has broken decisively below the important support of 16900-16800 levels, said Nagaraj Shetti, Technical Research Analyst, HDFC Securities. “The present chart pattern also indicates a downside breakout of the broader high low range movement of around 17400-16900 levels. This could be considered as a downside breakout of crucial lower support in the market. This is not a good sign and could have more weakness for the short term,” he added.

Levels to watch out for: With the Nifty having breached crucial support levels, now 16560 is the immediate support for the index said Palak Kothari, Research Associate, Choice Broking. She added that 17000 may act as an immediate hurdle for the index. “On the other hand, Bank nifty has support at 34800 levels while resistance at 36500 levels.” Nagaraj Shetti sees an immediate downside target at 16200 for Nifty.

FII and DII trades: Foreign Institutional Investors were net sellers of domestic stock on Wednesday, pulling out Rs 3,288 crore. Domestic Institutional Investors were net buyers, pumping in Rs 1,338 crore.

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