Dear Trader…
Domestic equities continued with its weakness for the fourth consecutive session, reacting to the RBI policy outcome and on worries of aggressive rate hikes by US Fed next week. Nifty though opened flat, saw profit booking post RBI MPC announcement despite the outcome being in line with estimates. It ended near days’ low at 18560 with loss of 82 points (-0.4%). Even midcaps and smallcaps saw weakness and were down 0.6% each. Except FMCG and PSU Banks, all the counters saw selling pressure.
Market is likely to remain consolidative given the bigger event of US Fed monetary policy due next week. Post the strong services PMI data and the jobs data, investors are worried that the Fed might continue with its aggression for some more time. Sector rotation is being witnessed in the market. Stock and sectors which have run up recently like IT, real estate, Auto, Private banks, metals are seeing some profit booking while the laggard sectors like FMCG, infra, cement are catching up. IT stocks which have seen a sharp run up in the last 2 months could come under pressure in near term. Most Indian IT services companies derive around 30-40% revenues from the BFSI segment, which off late is seeing some weakness. According to news reports, some of the large US and European Banks are planning to lay off people in view lower revenue projection next year.
Nifty futures opened at 18680.15 points against the previous close of 18771.35 and opened at a low of 18650.40 points. Nifty Future closed with an average movement of 124.25 points and a decline of around 97.65 points and 18673.70 points…!!
On the NSE, the midcap 100 index will decline 0.58% and smallcap 100 index is closing decline 0.59%. Speaking of various sectoral indices, the NSE saw gains in only PSU Bank And FMCG while all other sectoral indices closed lower.
At the start of intra-day trading, February gold opened at Rs.53810 fell from a high of Rs.53908 points to a low of Rs.53701 with a rise of 10 points, a trend of around Rs.53770 and March Silver opened at Rs.65500, fell from a high of Rs.65856 points to a low of Rs.65411, with a rise of 173 points, a trend of around Rs.65587.
Technically speaking, a sign of timidness is evident as there is no cue of follow-up buying in the index to levitate the sentiments. The recent developments construe a motion of tentativeness among the market participants as Nifty plunged to test the critical support zone. However, till the sacrosanct of 18500 is withheld, the view of buy on dip and sell on rise remains unscathed. The lack of firm buying is the only worrisome, signifying the indecisiveness among the bulls to retract the market. On the higher end, a decisive closure above 18700 could only bring some cheer back into the market, and then we may expect the northward journey to continue. Meanwhile, any breach below 18500 could dampen the sentiments further and Nifty could plunge towards the next support of 18400.
Going forward, the market is likely to remain in a slender range. We reiterate to keep a close tab on the mentioned levels. Also, one should continue with the stock-specific approach, as even though the indices may not be doing much, the individual stocks are not at all short of action. Also, one should stay abreast with global developments.
Technically, the important key resistances are placed in Nifty future are at 18606 levels, which could offer for the market on the higher side. Sustainability above this zone would signal opens the door for a directional up move with immediate resistances seen at 18808 – 18880 levels. Immediate support is placed at 18474 – 18373 levels.
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