Domestic markets fell after benchmark index Nifty 50 hit new all-time high of 22,249.4 in the opening trade on February 21. A broad-based profit-booking by investors was observed as volatility cooled off mildly. However, analysts expect Nifty to claim 22,700 in coming weeks as seasonal correction in an election year reaches an end.
"We expect Nifty to reach 22,700-mark in the coming weeks as seasonal correction in an election year reaches maturity. Historically, an election year index tends to bottom out in February or March followed by a pre-election rally. Thereby, bouts of volatility should not be construed as negative and instead investors should employ buy-on-dips strategy. In this process, a strong support is placed around 21,600," said analysts at ICICI Securities.
Sensex and Nifty declined 0.7 percent each to 72,623 and 22,029, respectively on February 21. Broader markets, too, dipped in the negative territory as Nifty Midcap 100 and Nifty Smallcap 100 indices slipped 1 percent each.
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India VIX, which measures market volatility, cooled off mildly to test 16 level.
Technically, the near-term target for Nifty is set at 22,400 and with strength sustaining, it can march ahead to next target of 22,800, with near-term support maintained at 22,000 zone, forecasted Vaishali Parekh, Vice-President - Technical Research at Prabhudas Lilladher.
Barring Nifty PSU Bank and Realty indices, all other sectors nosedived in the sea of red. Nifty Media index was the top sectoral laggard as it lost over 4 percent on February 21.
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All eyes on FOMC minutes reading to understand rate cut path
Globally, FOMC minutes will be keenly watched out by investors on February 21. Markets will keep a close eye on any clues regarding the timing of the first rate cut, which participants now expect to come in May.
According to CME Fed-watch tool, expectations for Fed to cut rate in March dipped to 8.5 percent and prospects of rate cut in May jumped to 33 percent against 28 percent a day ago.
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