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Market may fall further on inflation, rate hike worries; support for Nifty seen at 15,670: Experts

For traders, 15900 would act as a key resistance level and below which the Nifty could slip till 15650. However, 15900 would be the immediate trend reversal level for the bulls and above which we could see a strong pullback rally up to 16100-16300, says Amol Athawale, Deputy Vice President - Technical Research, Kotak Securities.

May 16, 2022 / 07:26 AM IST
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Indian market lost another 4 percent for the second consecutive week and further extended the weekly losing momentum to the fifth straight week ended May 13 as investors remained worried about rising inflation worldwide, with possibility of further rate hikes by global central banks going ahead.
Manish Shah, Independent Technical Analyst | Nifty may continue its decline over next couple of days and may drop lower towards 15720-15700. This is the point from where there is a probability that the market may reverse sharply. We still some confirmation that the buying has started and we will wait for the market to give us logical clues. Nifty is now at the major support at 15700-15600. This is a big psychological level for the market. A break below this will result in a sentiment change as Nifty will register a value of a 26 week low. The March 2022 low was also a failed breakout and this time also it could be a failed breakout. Nifty deeply extended on the downside. Nifty has seen an unprecedented 9 days of consecutive lower close. Such deviation from the mean is a rarity and sooner or later Nifty will rebound to the mean. We need to see strong green candles to confirm a bottom but as yet the bears rule the market. As we move into the second week of May brace traders should brace for more volatility in the coming days.
Manish Shah, Independent Technical Analyst | The Nifty may continue its decline over next couple of days and may drop lower towards 15,720-15,700. From here, there is a probability that the market may reverse sharply. We still have some confirmation that the buying has started and we will wait for the market to give us logical clues. The Nifty is now at the major support at 15,700-15,600. This is a big psychological level for the market. A break below this will result in a sentiment change as the index will register a value of a 26-week low. The March 2022 low was also a failed breakout and this time also it could be a failed breakout. The Nifty deeply extended on the downside. It has seen an unprecedented nine days of consecutive lower close. Such deviation from the mean is a rarity and sooner or later it will rebound to the mean. We need to see strong green candles to confirm a bottom but as yet the bears rule the market. As we move into the second week of May, traders should brace for more volatility in the coming days.
Sameet Chavan, Chief Analyst-Technical and Derivatives, Angel One | The recent low of 15671 is not far from current levels now and the moment we slide below it, it will create a panic kind of situation in the market. Below this, 15350 - 15200 are the next levels to watch out for. On the flipside, 16000 - 16200 has now become a stiff hurdle. The first sign of relief is possible only above these levels. Till this time, one should avoid trading aggressively in the market. If we take a glance at the weekly time frame chart, we can see a sheet anchor in the form of ’89-EMA’ placed around 15600. Historically, this moving average has proved its mettle and has provided a cushion to severe falls. It would be very interesting to see how the market behaves around it. Hence, although the trend is strongly bearish at this moment, we advise investors with a slightly broader time frame, should start nibbling on quality propositions in a staggered manner. Also, since the global factors are driving the markets completely, traders should keep a close tab on all these developments.
Sameet Chavan, Chief Analyst-Technical and Derivatives, Angel One | The recent low of 15,671 is not far from current levels now and the moment we slide below it, it will create a panic kind of situation in the market. Below this, 15,350 - 15,200 are the next levels to watch out for. On the flipside, 16,000 - 16,200 has now become a stiff hurdle. The first sign of relief is possible only above these levels. Till this time, one should avoid trading aggressively in the market. If we take a glance at the weekly time frame chart, we can see a sheet anchor in the form of ’89-EMA’ placed around 15,600. Historically, this moving average has proved its mettle and has provided a cushion to severe falls. It would be very interesting to see how the market behaves around it. Hence, although the trend is strongly bearish at this moment, we advise investors with a slightly broader time frame, should start nibbling on quality propositions in a staggered manner. Also, since the global factors are driving the markets completely, traders should keep a close tab on all these developments.
Ruchit Jain, Lead Research, 5paisa.com | The immediate support for Nifty is now placed around the early March low of 15670 below which 15450-15500 will be on cards. On pullback moves, the index once again resisted around the hourly ’20 EMA’ which is now at 16000 mark. A move above 16000-16075 is now required for any price wise pullback move in the coming week. Thus, until we see any change in the chart structure, we continue to advise traders to stay cautious. The Banking index showed some relative strength at the start of the week but ultimately it resumed the downtrend on the weekly expiry day and the day after. Thus, the trend here too remains negative and since there’s no divergence seen yet, one should not be in a hurry to bottom-fish.
Ruchit Jain, Lead Research, 5paisa.com | The immediate support for the Nifty is now placed around the early March low of 15,670 below which 15,450-15,500 will be on the cards. On pullback moves, the index once again resisted around the hourly '20 EMA’ which is now at 16,000 mark. A move above 16,000-16,075 is now required for any price wise pullback move in the coming week. Thus, until we see any change in the chart structure, we continue to advise traders to stay cautious. The banking index showed some relative strength at the start of the week but ultimately it resumed the downtrend on the weekly expiry day and the day after. Thus, the trend here too remains negative and since there’s no divergence seen yet, one should not be in a hurry to bottom-fish.
Palak Kothari, Research Associate at Choice Broking | Technically, The Nifty has formed a bearish candle on the weekly chart which indicates downside movement for the upcoming session. Moreover, Nifty has faced resistance from rising trendline and showed selling pressure which is a sign of selling of higher levels. In addition, Nifty has been sustained below the neck line of the Head & Shoulder pattern which indicates southward direction for the upcoming session. However, the momentum indicators MACD & Stochastic were trading with a negative crossover and entered the oversold zone. However, till now, there is no reversal sign. The Nifty may find support around 15700 levels, while on the upside 16100 may act as an immediate hurdle for the Nifty crossing above the same can attract fresh buying. On the other hand, Bank nifty has support at 32600 levels while resistance at 34000 levels.
Palak Kothari, Research Associate at Choice Broking | Technically, the Nifty has formed a bearish candle on the weekly chart which indicates downside movement for the upcoming session. Moreover, the Nifty has faced resistance from rising trendline and showed selling pressure which is a sign of selling of higher levels. In addition, it has been below the neck line of the Head and Shoulder pattern which indicates southward direction for the upcoming session. However, the momentum indicators MACD and Stochastic were trading with a negative crossover and entered the oversold zone. However, till now, there is no reversal sign. The Nifty may find support around 15,700 levels, while on the upside 16,100 may act as an immediate hurdle for the Nifty crossing above the same can attract fresh buying. On the other hand, Bank Nifty has support at 32,600 levels while resistance at 34,000.
Rahul Sharma, Research Head, Equity 99 | We still believe that markets might fall further on inflation and rate hike worries. Investors are advised to remain invested in quality stocks and keep adding stocks on major dips in SIP mode. Further trading with strict targets and stop loss is recommended.
Rahul Sharma, Research Head, Equity 99 | We still believe that markets might fall further on inflation and rate hike worries. Investors are advised to remain invested in quality stocks and keep adding stocks on major dips in SIP mode. Further trading with strict targets and stop loss is recommended.
Amol Athawale, Deputy Vice President - Technical Research, Kotak Securities | For traders, 15900 would act as a key resistance level and below which the index could slip till 15650. However, 15900 would be the immediate trend reversal level for the bulls and above which we could see a strong pullback rally up to 16100-16300.
Amol Athawale, Deputy Vice President - Technical Research, Kotak Securities | For traders, 15,900 would act as a key resistance level and below which the Nifty could slip till 15,650. However, 15,900 would be the immediate trend reversal level for the bulls and above which we could see a strong pullback rally up to 16,100-16,300.
Yesha Shah, Head of Equity Research, Samco Securities | Both the Indian and major global indices are now at oversold levels. So, an immediate rebound in the Nifty and BankNifty is highly possible. Basis how Nifty opens next week, highly aggressive traders may initiate long trades with a strict stop loss right below 15,700. The immediate resistance is now set at 16,600 levels. As the result season approaches its climax, D-Street will move in sync with global news flow. Next week India’s WPI data will be released and the much-anticipated IPO, LIC, will be listed on the exchanges. Apart from these, no other major events are expected. In absence of any positive catalysts, indices are expected to remain under pressure as selling is emerging on every bounce. Investors are therefore urged to remain on the sidelines since it is preferable to wait out the storm than to go bottom fishing during such turbulent phases.
Yesha Shah, Head of Equity Research, Samco Securities | Both the Indian and major global indices are now at oversold levels. So, an immediate rebound in the Nifty and BankNifty is highly possible. Basis how the Nifty opens this week, highly aggressive traders may initiate long trades with a strict stop loss right below 15,700. The immediate resistance is now set at 16,600 levels. As the result season approaches its climax, D-Street will move in sync with global news flow. India’s WPI data will be released this week and the much-anticipated IPO, LIC, will be listed on the exchanges. In absence of any positive catalysts, indices are expected to remain under pressure as selling is emerging on every bounce. Investors are therefore urged to remain on the sidelines since it is preferable to wait out the storm than to go bottom fishing during such turbulent phases.
Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services | The expected rate hike cycle continues to remain a key overhang for equity markets globally. Also relentless FII selling in the domestic market has added to the overall downtrend. Nifty is struggling to cross 16,000 zones with selling emerging at higher levels. While the markets are oversold, we expect both volatility and weakness to continue next week as well given the weak global cues. Also continuous FII selling in Index heavyweights could limit upside on any possible bounce.
Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services | The expected rate hike cycle continues to remain a key overhang for equity markets globally. Also relentless FII selling in the domestic market has added to the overall downtrend. Nifty is struggling to cross 16,000 zones with selling emerging at higher levels. While the markets are oversold, we expect both volatility and weakness to continue next week as well given the weak global cues. Also continuous FII selling in Index heavyweights could limit upside on any possible bounce.
Ajit Mishra, VP Research, Religare Broking | In absence of any major event, participants will be closely eyeing the performance of global indices, the Russia-Ukraine war updates and China’s COVID situation for cues. Besides, the listing of insurance behemoth, LIC, would also be on the radar. On the data front, WPI Inflation is scheduled for May 17. On the earnings front, some prominent names like Bharti Airtel, DLF, Hindustan Petroleum, NTPC, IOC, ITC, Lupin, Ashok Leyland and Dr.Reddy’s Laboratories will declare their numbers during the week. Markets have turned oversold after five weeks of continuous decline however there’s no sign of reversal yet. The fresh breakdown in the banking pack has further strengthened the bearish sentiment. Nifty has almost reached closer to the March low i.e. 15,671.45 levels and its breakdown would push the index to the 15,400 zone. Since we’re seeing rotational selling across sectors, traders should align their positions accordingly and avoid contrarian trades. Investors, on the other hand, may consider nibbling selectively into IT, FMCG and auto pack.
Ajit Mishra, VP - Research, Religare Broking | In absence of any major event, participants will be closely eyeing the performance of global indices, the Russia-Ukraine war updates and China’s COVID situation for cues. Besides, the listing of LIC shares would also be on the radar. On the data front, WPI Inflation is scheduled for May 17. On the earnings front, some prominent names like Bharti Airtel, DLF, Hindustan Petroleum, NTPC, IOC, ITC, Lupin, Ashok Leyland and Dr Reddy’s Laboratories will declare their numbers during the week. Markets have turned oversold after five weeks of continuous decline however there’s no sign of reversal yet. The fresh breakdown in the banking pack has further strengthened the bearish sentiment. The Nifty has almost reached closer to the March low i.e. 15,671.45 levels and its breakdown would push the index to the 15,400 zone. Since we’re seeing rotational selling across sectors, traders should align their positions accordingly and avoid contrarian trades. Investors, on the other hand, may consider nibbling selectively into IT, FMCG and auto pack.
Vinod Nair, Head of Research at Geojit Financial Services | The release of higher-than-expected US CPI data suggests that the inflationary pressure will persist in the near term. However, it is presumed to have peaked and will gradually decline in line with the ongoing fall in crude and other commodity prices, & a slowdown in the economy. The Fed surprised the market with a hawkish stance, limiting liquidity, which limits further setbacks in the future. We can expect stability in the market as FIIs selling reduces factoring inflation & Fed policy. On the other hand, DIIs have lost their confidence after bearing continuous losses. Given the current volatility in the market, investors prefer defensive sectors like IT and Pharma supported by the weakening INR. Going ahead, the major determinant for market direction would be the pace of decline in inflation in response to the Fed measures
Vinod Nair, Head of Research at Geojit Financial Services | The release of higher-than-expected US CPI data suggests that the inflationary pressure will persist in the near term. However, it is presumed to have peaked and will gradually decline in line with the ongoing fall in crude and other commodity prices, and a slowdown in the economy. The Fed surprised the market with a hawkish stance, limiting liquidity, which limits further setbacks in the future. We can expect stability in the market as FII selling reduces factoring inflation and Fed policy. On the other hand, DIIs have lost their confidence after bearing continuous losses. Given the current volatility in the market, investors prefer defensive sectors like IT and Pharma supported by the weakening rupee. Going ahead, the major determinant for market direction would be the pace of decline in inflation in response to the Fed measures.
Rakesh Patil
first published: May 16, 2022 07:26 am
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