After the May 4 knee-jerk reaction to the Reserve Bank of India's unscheduled interest rate hike that sent Indian equity markets reeling, the Fed's announcement of a 50 basis point rate hike prompted a recovery rally in global equities. US markets ended yesterday's trading higher and Asian markets reacted positively to early morning trading. However, they reduced wins and ended on a flat note. The Indian markets were no different and had a strong open in the morning but volatility crept in during the post-lunch session on profit booking as the markets pared all of their gains and ended up where they started the morning. The Sensex ended flat with a marginal gain of 33 points at 55702, while the Nifty ended the day with a small gain of 5 points at 16,682. Fear of an aggressive rate hike by the US Federal Reserve has been the main driver of global volatility over the past few days. The Fed's decision to remain less hawkish with a 50 basis point rate hike downplayed investor concerns and helped global markets recover. Sensex had a gap to the upside of 586 points at 56255 points. It continued to rally to create an intraday of 56566 within the first hour of trading. However, sentiment changed and turned the tide, leading to a wild swing of 953 points from the daily high as the market touched a daily low of 55614. The Nifty opened with a gap of 177 points higher at 16854 to hit a daily high of 16945 before falling 294 points to a daily low of 16652. Markets gave back most of their early gains on profit taking in real estate stocks, pharmaceuticals and PSU bank stocks. The initial momentum did not last as investors turned risk-free amid worries of high inflation and the prospect of further rate cuts that would dampen future growth. Another factor is that investors are withdrawing funds from the secondary markets and pouring them into LIC's ongoing IPO. With all major events behind us, the focus would return to earnings and the upcoming macroeconomic data. We reiterate our bearish bias on Nifty and suggest continuing the sell-on-rise approach. Stocks, on the other hand, present opportunities on both sides, so traders should adjust their positions accordingly. Technically, after a sharp decline, the Nifty has formed an inside bearish candle and is also holding a lower top formation on intraday charts, suggesting further correction from current levels. As long as the index trades below 16800 the corrective wave should continue and below that the Nifty could reach the 16650-16550 levels. On the downside, 16650 and 16500 would act as immediate hurdles. Above 16900, the market could reach the 17000 level.
Resistance: 16800, 16950, 17100
Support: 16650,
16500, 16350
No comments:
Post a Comment