The Sensex & Nifty broke a six-day winning streak to finish slightly lower on Thursday, weighed down by market heavyweight Reliance Industries (RIL) and bank stocks. The Sensex fell 51 points to close at 58298 while the Nifty slipped 6 points to settle at 17382. Both indices had opened over 0.5% higher earlier in the day, led by gains in information technology (IT) stocks, but ended up soon turning negative on morning offers. However, in the last hour of trading, they trimmed their intraday losses to end with minor cuts. Domestic market volatility has increased in the last 3 days. However, strong buying at lower levels has helped Nifty maintain its positive close for 6-7 consecutive days. This shows the underlying strength of Indian markets despite increasing volatility and escalating geopolitical tensions. After surging sharply over the past few days, Nifty is now trading at 20x FY23 PE, which is above its 10-year moving average and thus offers limited upside potential in the short-term. The RBI policy result on Friday would be the key event the market would follow. Going forward, it could be a tug of war between domestic and global factors that would determine market direction. The Nifty tested the 78.6% retracement of the April-June decline on Aug 4th. It missed the short term target of 17550 by a small margin from which profit booking was triggered. As a result, the index experienced a steep drop in the first half of the session. It managed some recovery in the second half, but eventually a bearish outside bar and a hanging man candle formed on the daily chart. The markets ended their 6-day winning streak based on profit booking. This shows that the index is now entering a short-term consolidation phase. 17100-17600 is expected as a near-term consolidation area. As the index has tumbled near the top of the range, it is likely to move towards the bottom of the range, i.e. 17100, move. Volatility was the hallmark of today's trading as a nifty amid reports of raising US tensions in China. The positive takeaway, however, was that Nifty recouped most of its losses from the daily low of 17161 to finish a bit below the dotted lines at the 17400 level. Technically, immediate support for Nifty is seen at 17121 and below, expects the index to slide quickly towards 16800-17000. Alternatively, if Nifty’s support holds at 17150, then expect the benchmark to rocket to the moon with targets at 17575 and then 17800.
Resistance: 17500, 17700, 17900
Support: 17100, 16800, 16600
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