The sharp sell-off in US markets has changed global sentiment and is affecting our markets as well. Markets experienced a red sea on Dalal Street as the Fed prioritized inflation flight over growth. The Nifty plummeted, ending deep in red as bears were seen in total control after Jerome Powell's remark during his Jackson Hole appearance that interest rates may continue to rise to fight inflation. Markets started the week on a weak note, falling over a percent, weighed down by weak global sentiment. After the gap-down start, the benchmark was in a narrow range for most sessions. At the close, the Sensex was down 861 points to 57972 and the Nifty down 246 points to 17312. The majority of the sector indices traded in line with the index and ended lower with the IT package losing maximum. Investors had already picked up a bearish undertone at the start of the week after the US Fed Chair spoke of further rate hikes to tame inflation in his speech on Friday. And as expected, Sensex plummeted nearly 1,500 points in early trades before gaining some ground to close its daily low. The Nifty had experienced a minor bounce over the past week, retracing almost 61.8% of the first leg of the fall. Structurally, the index was preparing for a downward movement. Accordingly, on August 29, the index had a huge downward gap. Traders expect more bouts of volatility in the coming sessions amid concerns that continued US rate hikes could pose a threat to the global economy and hurt growth prospects. Technically, the Nifty closed below the 20-day SMA (simple moving average), which is largely negative. On the way down, the index broke the 17350 swing low, which was retested with an intraday bounce. Although the index saw some recovery throughout the day, it is unlikely to make any further headway. 17400-17500 is an immediate resistance zone where the index is likely to attract another round of selling. The overall short-term target remains at 17200. For all the negativity, some sectors/stocks are still showing tremendous resilience so the focus should be more on selection to navigate during the correction phase. Nifty slid sharply as it broke out of consolidation on the daily chart, signaling an increase in the bearish bet in the market. Momentum oscillator RSI is in a bearish crossover and is falling towards the oversold zone. The short-term trend at the crossroads looks weak, at the bottom the index could drift lower towards 17,000-16,800 in the short-term. On the upper end, resistance is seen at 17500.
Resistance: 17400, 17550, 17700
Support: 17300,
17150, 17000
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