Markets traded volatile, losing over a percent on weak global signals. News of a deepening war between Russia and Ukraine prompted a weak start, made worse by a sharp rise in crude oil prices. However, a rebound in the last hour of trading pared some losses. Consequently, the Nifty index settled around 16605; down 1.12%. Most sector indices closed lower in line with the benchmark while broader indices traded mixed. Equity markets continued their weakness as various developments on the Russia-Ukraine front caused crude oil and other commodity prices to spiral. Indian markets gapped lower in line with global peers as various sanctions imposed on Russia threatened to cut off supplies of crude oil and various other commodities. Towards the end, however, the market rallied on reports of a second round of peace talks between Russia and Ukraine, scheduled for Wednesday evening, raising hopes of some relief. Volatility is likely to remain high in the near term given the escalating conflict between Russia and Ukraine, upcoming state election results and the Federal Reserve Board meeting. Additionally, the market would be keeping an eye on developments in the Russia-Ukraine talks. If the Russia-Ukraine conflict is prolonged and leads to increased energy prices for a longer period of time, this can have an impact on margins and earnings. We expect Nifty's weakness to continue until it is below its crucial 200 DEMA of ~16750. On the upside, however, last week's low of 16200 could serve as strong support. Traders need to be wary of sharp moves either way, while investors can take advantage of the current decline to gradually add quality blue chip companies to their portfolios. Markets have gradually declined in the face of unpredictable intraday swings, but the dip is more severe across the board. We think volatility will continue and the proposed weekly schedule would add further volatility on Thursday. Among the sectors, metals and energy stocks look solid while others are watching mixed trends. Participants have no choice but to adjust their positions with the trend and prefer a hedged approach. Technically, market texture has turned weak with a sell-on-rise structure after Nifty slipped below its 200-DMA. However, Nifty is attempting to gain a foothold in the 16450-16250 zone but bulls confidence will only be back above the 17000 level, if Nifty slips below 16200 then 15900 will be the next key support level. Bank Nifty is trading near a key psychological support level of 35000 and if it manages to hold this level we can expect brief coverage towards the 36300-36700 zone while it slides below the 35000 level then becomes 34500 be the next key support level. Short term traders should remain cautious given the many uncertainties as to where 16300 should be their trading stop loss for long positions. Investors should focus on sectors such as capital goods, infrastructure, real estate, banks, etc. that are facing the domestic economy.
Resistance: 16600, 16700, 16800
Support: 16500,
16400, 16300
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