Closing Bell: Nifty below 19,300, Sensex down 366 pts; all sectors in the red

Taking Stock: Friday a tumble; Sensex down 366 points, Nifty below 19,300

All the sectoral indices ended in the red, with capital goods, FMCG, PSU bank, metal, realty and power down a percent each... Read More

On the weekly chart, Nifty50 has formed an Inverted Hammer candlestick pattern which indicates a potential reversal of the trend, and on the daily chart, the Index managed to close above the strong support level of 19,250. The same candlestick pattern was spotted in the weekly chart of BankNifty as well. The immediate support for Nifty is at 19,200 while the higher side is capped at 19,470, and in the case of BankNifty, the support is 43,600 while resistance stood at 44,960. Any uptick in the Nifty and BankNifty will be accompanied by the hidden bullish divergence in the RSI which is an extremely bullish sign.

Except for the pharma sector, all the other sectors are stuck in the range and only breakout on either side will give a proper direction. The ongoing correction in the Pharma sector is likely to continue to the tune of 1-2% before the resumption of an uptrend. Despite the correction in the markets, Mid and Smallcap indices ended the week in green, and a couple of stocks have given a strong breakout while some are on the verge of giving a breakout which indicates a continuation of outperformance by the Broader markets going forward as well.

There is already great degree of pessimism with regards to slowing global growth due to rising inflation and higher interest rate scenario, and investors taking no chance further resorted to profit taking ahead of the outcome of the Federal Reserve Chairman Jereme Powell’s speech at Jackson Hole symposium. There are fears that the Fed chairman in his speech could highlight worries of rising inflation, and why further rate hike is necessary to bring down the inflation levels.

Technically, the Nifty witnessed profit booking near the 20-day SMA (Simple Moving Average). After a long time, the index has closed below the 50-day SMA which is largely negative. For the positional traders, 19350 could be the trend decider level, above which the market could bounce back till 19450 and 19575 levels. On the other hand, selling pressure is likely to accelerate if the index trade below 19230 and below the same, the market could slip till 19150-19100.
For Bank Nifty, on the lower side 44000 would be the key support zone while 44750 or 50 and 20 day SMA and 45000 could act as immediate hurdle areas for the bulls. Below 44000, it could retest the level of 43750-43500.

The Nifty opened the gap down today and thereafter witnessed volatile price action throughout the day. It closed in the negative down ~120 points. On the daily charts, we can observe that the selling pressure from the previous trading session continued today as well. It has reached the 38.2% Fibonacci retracement level 19,245 of the rise from 16,828 – 19,992 which makes it a crucial level to watch out for.

On the weekly charts, Nifty has closed negative for the fifth consecutive week which also indicates there is a lack of buying interest. Weekly, daily, and hourly momentum indicators have a negative crossover which is a sell signal. Thus, both price and momentum indicators suggest a continuation of the fall.

Overall, we shall continue to maintain our negative outlook on the index for a target of 19,100. Crucial support is placed at 19,200 – 19,180 while immediate hurdle is placed at 19,360 – 19,400.

The pullback rally in Bank Nifty has fizzled out at the 44,900 – 45,000 zone where resistance in the form of the 50% Fibonacci retracement level was placed. The daily and the hourly momentum indicators provide divergent signal and hence a consolidation is likely. The range of consolidation is likely to be 44,800 – 43,900.

The Nifty index has declined to a significant moving average (55EMA) support level. The sentiment is expected to stay bearish as long as the index remains below 19450, where the 21-day Exponential Moving Average (EMA) is positioned on the daily timeframe. If the index decisively falls below 19240, it could potentially lead the Nifty towards the 19000 mark.

Markets traded under pressure and lost over half a percent, in continuation of Thursday’s decline. Initially, Nifty opened gap-down and remained range bound till the end. It finally settled around the day’s low to close at 19265.80 levels. All sectors traded in sync with the benchmark wherein realty, metal and pharma were the top losers. And, we saw profit taking in the broader indices too.

Nifty has breached the crucial support of short term moving average i.e. 50 EMA on Friday, which indicates the tone to remain negative. We are eyeing 19,100 as the next support. However, a mixed trend on the sectoral front would continue to offer trading opportunities on both sides, so plan your trades accordingly.

The rupee experienced a decline of 0.08rs as the dollar index rallied, possibly influenced by the strong performance the rupee had shown in the preceding days. The ongoing Jackson Hole Symposium, where the Federal Reserve's perspective on the overall economic outlook is anticipated, holds the potential to introduce new significant triggers to the market. The current strength of the dollar seems to be supported by the growing possibility of higher interest rates in upcoming meetings.

Looking ahead, the trading range for the rupee is projected to be within 82.50 to 82.90. If the rupee manages to breach the upper range, it could potentially move towards 82.10 to 82.00. Conversely, a downward break might push the rupee towards the 83.45 mark. These levels will likely be influenced by the outcome of the Jackson Hole Symposium and any subsequent developments in the global financial landscape.

The Bank Nifty index witnessed an ongoing struggle between bulls and bears, resulting in a phase of range-bound trading. The support level is clearly visible around 44000, coinciding with significant put writing, which could act as a stronghold against downward movements. Conversely, resistance can be observed around 45000, where the highest open interest is seen on the call side, indicating potential selling pressure. A decisive break on either side of this range could trigger trending moves. Despite this, the prevailing bias appears to lean towards the bullish side within the range.

There is already great degree of pessimism with regards to slowing global growth due to rising inflation and higher interest rate scenario, and investors taking no chance further resorted to profit taking ahead of the outcome of the Federal Reserve Chairman Jereme Powell’s speech at Jackson Hole symposium. There are fears that the Fed chairman in his speech could highlight worries of rising inflation, and why further rate hike is necessary to bring down the inflation levels.

On Friday, the rupee traded lower as the dollar strengthened into the risk event and a hawkish tone by Powell is now largely priced in at Jackson Hole later today. However, the rupee registered the first weekly gains in five amid the central bank’s intervention and lower crude oil prices. Regional PMI reports and India's GDP will be the highlight of next week.

India's GDP growth in the second quarter may come in at about 7.8% from the previous 6.1%. Spot USDINR is expected to trade between 82.80 to 82.40, in the coming days.

Investor caution is evident globally, as concerns about potential rate hikes dominate the prevailing sentiment ahead of the Jackson Hole meeting.

Furthermore, the minutes from the RBI MPC meeting reiterated their dedication to managing inflation within the target range, given the elevated domestic inflation levels. However, the expectation of a rate hike remains subdued, as the current high inflation is perceived as transitory.

Benchmark Indices opened weak in line with global cues ahead of the FED meet and Powell's speech today. Back Home all sectoral indices ended in the red with even the Midcap Index down over a percentage. D-Street Bulls preferred to wait until Monday for the big AGM which probably could be of interest to investors.

Indian rupee ended lower at 82.65 per dollar on Friday against Thursday's close of 82.57.