Written by Rahul Shah
The Sensex came under pressure to sell off for the sixth straight session as risk-off attitude prevailed over concerns among foreign institutional investors about uninterrupted sales and inflation concerns. This is the longest weekly losing streak for the Sensex and Nifty in more than two years since the run ended in April 2020. The Sensex fell nearly 3000 points, or 5.2%, to close at 52794, and the Nifty slipped 900 points, or 5.4%, to close at 165280. Levels are unable to keep the domestic market afloat as consumer inflation (CPI) concerns rise sharply in April due to higher food and fuel prices in eight years, prompting speculation that the Reserve Bank of India may raise interest rates further.
In addition, continued FII sales, weak quarterly results and rising oil prices have had a negative impact on the market. FIIs had about $ 3 billion or Rs 20,000 crore net sellers per week whereas DIIs had over Rs 18000 crore net buyers. Global markets continued to move south as the Dow Jones and Nasdaq composite fell more than 2% compared to the previous week’s close. High inflation in the United States and hawkish Fed bonds have boosted yields, negatively impacting global equity markets.
Among major sectors, the metal index witnessed the biggest loss this week (down 14.3%) as the US dollar index rose to a 22-year high of 105. The yellow metal fell 8% from its recent high to a three-month low of 24 1824. / Ounce Investors favored the dollar as a source of value in accelerating inflation and in anticipation of aggressive financial austerity. Interest-sensitive sectors such as banks and realty indices fell 6% and 9%, respectively, in anticipation of further RBI interest rate hikes.
Bounce back this week?
Markets are expected to see a pullback this week after a sharp correction in the last few trading sessions due to being in the oversold zone. The possibility of bargaining in the market cannot be ruled out after the recent Nifty Auto Tech Index has been revised upwards by 20-25%. However, traders should stay in a light position and avoid aggressive buying until a clear trend comes. The minutes of the RBI meeting will be announced on Wednesday while the LIC IPO list could be on Tuesday. Overall, there was a negative sentiment in the market as domestic inflation peaked at 8-year highs and US inflation rose to 40-year highs. Rising global inflation could point to an aggressive rate hike by most countries in the world. India has announced restrictions on wheat exports and Indonesia has banned palm oil exports to offset their inflationary pressures.
The rise of the Cowid case in China, Russia-Ukraine geopolitical concerns, rising oil prices, the USDINR’s new high of $ 78, the relentless selling of FIIs, the 20-year high of the US dollar index could hurt market sentiment. India’s trade deficit widened to $ 20.11 billion in April from a year earlier, driven by higher oil import costs, amid indications of higher trade deficits amid continuing global geopolitical concerns. The IMD says the June-September monsoon is likely to reach Kerala on May 27, before the normal arrival date of June 1, which could be a positive sentiment in domestic markets.
In best-selling areas
The Nifty has been experiencing some weakness since the last few trading sessions and has been volatile as the inch has shrunk. This has created a bearish candle on a daily and weekly scale that will keep the index under pressure. However, Momentum Indicators are in the best-selling areas on a daily scale so some pullbacks cannot be blown up to the highs of the 16250-16500 zone where resistance may be encountered. The bottom support is placed in the 15600-15400 zone.
Ambuja Cement: Buy
Goal: Rs Stop Loss: Rs
Ambuja Cement has given a trendline breakout on a daily scale and has supported 50 DEMA as well as 38.2% retracement of recent growth. This has created a strong bullish candle in the support zone which indicates interest in buying over the counter. The RSI oscillator is positively placed on a daily and weekly scale. Considering the current chart structure, we recommend traders to buy stocks with a stop loss of 352 towards 380.
Mahindra Bank Box: Buy
Target: Rs Stop Loss: Rs
Kotak Bank has created about 1700 zones and made it higher inches. This has given a consolidation breakout on a daily scale which has a bullish effect. The stock has made bullish candles on the daily chart and the supports are gradually shifting higher. The RSI oscillator is positively placed on a daily and weekly scale. Considering the current chart structure, we recommend traders to buy stocks to move towards 1900 with stop loss of 1720.
(Rahul Shah Senior Vice President, Group Advisory Leader – PCG, Broking & Distribution, Motilal Oswal Financial Services. Opinions are the author’s own. Please consult your financial advisor before investing.)