The Indian equity market lost nearly 2 per cent amid high volatility, with the Sensex down 1,141.78 points, or 1.95 per cent, at 57,197.15 and the Nifty closing 303.65 points, or 1.73 per cent, lower at 17,172 in the week ended April 22. US Federal Reserve’s hawkish comments on the rate hike in May, rising bond yields, mixed quarterly numbers, and a worsening Russia-Ukraine war saw the market close in the red.
Santosh Meena, Head of Research, Swastika Investmart Ltd., said: “It was the second week of fall in the Indian equity market on the back of weak global cues, earnings disappointment from IT names, and pain in HDFC twins. It is expected that the next week will also kick off on a somber note on the back of a sharp fall in the US market on Friday after hawkish commentary by the US Fed and weak earnings. The global questions may dominate next week along with April month F&O expiration and Q4 earnings. In terms of Q4 earnings, the market will react to the results of ICICI Bank on Monday while Bajaj Finance, HDFC Life, Bajaj Auto, HUL, Ambuja Cement, Axis Bank, Bajaj Finserv, Vedanta, Indusind bank, Maruti Suzuki, Ultratech cement and Wipro will be other key results which are scheduled next week.”
Sectorally, the Nifty information technology lost 5.6 per cent and the Nifty media index 4 per cent. The Nifty PSU bank and Nifty bank indices lost 4 per cent each. The Nifty auto index, however, added 3 percent, Nifty energy and oil & gas rose 2.4 per cent each.
Vinod Nair, head of research at Geojit Financial Services, said: “Global markets have moved cautiously in context to inflation data release, uncertainties of war development, volatile crude prices, hawkish FED policy, and mixed quarter results.”
FIIs are continuously selling in the Indian equity market and their behavior will be important amid concerns of aggressive rate hikes in the USA. There are still uncertainties about the Russia-Ukraine war whereas the market will also have an eye on crude oil prices. If we look at the derivative data then the put-call ratio is sitting at 0.91 level whereas FIIs’ long exposure in index future stands at 47 per cent, both are heading towards the oversold zone.
Nifty Technical Outlook
In terms of OI distribution, the highest OI on the put side stands at the 17,000 mark, below this, we can expect more selling pressure. On the upside, open interest for call options is evenly distributed between 17,200-and 17,500.
Technically, Nifty has a sacrosanct support level of 16,800, below this, Nifty is vulnerable to a major fall however 16,600 is also another support level as a 61.8 per cent retracement of the previous rally. On the upside, 100-DMA of 17,300 is an immediate and strong hurdle while 20-DMA of 17,450 is the next critical hurdle.
Banknifty is likely to surrender a psychological support level of 36,000 whereas 35,000 is the next critical support level. On the upside, 36,500-37,000 is a critical supply zone.
What Should Investor Strategy Be This Week?
“Traders are advised not to trade aggressively till the trend becomes clear and also, unlike the previous weeks, we are not left with any convincing idea in individual stock as well. So, one needs to be selective when it comes to stock-centric approach and should follow strict stop losses for momentum bets,” said Sameet Chavan, Chief Analyst-Technical and Derivatives, Angel One.
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