Will bulls stage a comeback or bears to drag Nifty below 17300? 5 things to know before market opening bell
Indian equity markets are likely to extend losses on Tuesday amid weak global cues. Benchmark indices are expected to open in the red as trends in the SGX Nifty indicated a negative opening with a loss of 85 points. In the previous session, the S&P BSE Sensex dived 872 points or 1.46% to settle at 58,773 while the NSE Nifty 50 index tanked 267 points or 1.51% to end at 17,490. “The fear of aggressive rate hikes by apex banks has started haunting the participants again. Though the Nifty has re-entered the declining broadening pattern, we expect the index to respect 17,300 levels,” said Ajit Mishra, VP – Research, Religare Broking.
Global markets: Wall Street ended sharply lower on Monday as investors fretted about a US Federal Reserve gathering later this week in Jackson Hole, Wyoming, that is expected to reinforce a strong commitment by the central bank to stamp out inflation. The S&P 500 declined 2.14% to end the session at 4,137.99 points. The Nasdaq100 declined 2.55% to 12,381.57 points, while Dow Jones Industrial Average declined 1.91% to 33,063.61. Stocks retreated in Asia on Tuesday. Bourses in Japan, Australia and South Korea were in the red, while S&P 500 and Nasdaq 100 futures stabilized, eking out modest gains, after slumps of more than 2% in both indices overnight.
Nifty technical view: A long bear candle was formed on the daily chart, that has confirmed the false upside breakout of the significant overhead resistance of down sloping trend line at 17900 levels. “The long bear candle of the last two sessions signal a faster downside retracement of the last 5-6 sessions of upmove of 10th to 18th Aug. This is negative indication and signal that bears are in a drivers seat,” said Nagaraj Shetti, Technical Research Analyst, HDFC Securities.
“The positive sequence like higher tops and bottoms is still intact and and present weakness could be in line with the formation of new higher bottom of the sequence. But, a crucial downside reversal from the significant resistance and the formation of negative patterns as per daily and weekly charts signal possibility of some more cut for the market before showing any upside bounce from the lows. The short-term trend of Nifty continues to be down and the overall bearish chart pattern signal more weakness ahead,” he added.
Levels to watch out for: Nifty witnessing profit booking on account of concerns over interest rate hike and weakening Indian rupee which could dampen demand as we step into festive season. In the absence of any domestic trigger, focus has again shifted back to global cues. Even valuations are not supportive at the current levels. Markets are thus likely to consolidate in the near term, till the risk reward turns favourable,” said Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services. According to Deepak Jasani, Head of Retail Research, HDFC Securities, the next support will be 17390-17408. On rises, 17597-17632 could offer resistance.
FII and DII data: Foreign institutional investors (FIIs) sold equities worth Rs 453.77 crore, while domestic institutional investors (DIIs) offloaded net shares worth Rs 85.06 crore on August 22 (Monday), according to the provisional data available on the NSE.
Also Read: US stocks knocked down as torrid rally hits a wall, investors brace for hawkish Fed; Dollar rises, crude falls
Stocks under F&O ban on NSE: Tata Chemicals is the only stock under the NSE F&O ban list for August 23 (Tuesday). Securities in the ban period under the F&O segment include companies in which the security has crossed 95 per cent of the market-wide position limit.
