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RBI Policy, global data in focus this week. Support for Nifty at 17,400: Experts

The RBI is scheduled to announce its monetary policy. The Central Bank is expected to maintain its accommodative stance to maintain adequate liquidity in the system and to support economic activity, says Vinod Nair, Head of Research at Geojit Financial Services.

October 04, 2021 / 08:11 AM IST
Sensex
Indian market saw selling pressure throughout the week ended October 1 and also broke its 5-week winning streak on the back of weak global cues. On the weekly basis, BSE Sensex lost 1,282.89 points (2.13 percent) to close at 58,765.58, while the Nifty50 fell 321.2 points (1.79 percent) to close at 17,532 levels.
The market will have an eye on the global data to get further direction. On the domestic front, we don't have many negative cues but it will be important to listen to the commentary of RBI's governor in the upcoming policy scheduled on 8th October where what he says about inflation will be important. On 8th October, TCS will announce its Q2 earnings, probably post-market closing where we know that it will be another quarter of strong earnings for the IT sector but most of the projections are priced in and the market has started to worry about attrition rate and margin pressure due to wage hike. The movement of the dollar index, US bond yields will also play an important role in the direction of global markets while crude oil prices will have a major impact on Indian markets. Technically, the charts of most of the global indices are forming bearish formations however they are trading near their important support levels that may lead to some bounceback therefore market may remain choppy next week. 17,300-17,250 is a critical support area, below this, Nifty is vulnerable to fall towards 16,700 level where 17000 will be an intermediate psychological support level. On the upside, 17,600 will act as an immediate and strong hurdle while 17,725-17,775 will be a critical resistance zone because above this, bulls are likely to dominate.
The market will have an eye on the global data for further direction. On the domestic front, we don't have many negative cues but it will be important to listen to the commentary of RBI's governor in the upcoming policy scheduled on October 8 where what he says about inflation will be important. On October 8, TCS will announce its Q2 earnings, probably post-market closing where we know that it will be another quarter of strong earnings for the IT sector but most of the projections are priced in and the market has started to worry about attrition rate and margin pressure due to wage hike. The movement of the dollar index, US bond yields will also play an important role in the direction of global markets while crude oil prices will have a major impact on Indian markets. Technically, the charts of most of the global indices are forming bearish formations however they are trading near their important support levels that may lead to some bounceback therefore market may remain choppy next week. 17,300-17,250 is a critical support area, below this, Nifty is vulnerable to fall towards 16,700 level where 17000 will be an intermediate psychological support level. On the upside, 17,600 will act as an immediate and strong hurdle while 17,725-17,775 will be a critical resistance zone because above this, bulls are likely to dominate.
Samco Research | Traders should expect an action-packed week ahead with a series of intriguing news. Market participants will try to read between the lines of the RBI's monetary policy. Given that economic activity has not yet returned to pre-pandemic levels, the RBI is unlikely to remove the economy's training wheels. Any deviation from this stance, however, may result in whipsaw movements. Furthermore, with OPEC meeting to determine output for November, market participants should brace themselves for greater volatility in crude oil prices. Besides that, the Fed will be looking at the US jobs statistics, which will be announced at the end of the week, to determine their next moves on tapering. This caution may migrate to Indian markets, and investors are advised to be selective in their stock picks.
Samco Research | Traders should expect an action-packed week ahead with a series of intriguing news. Market participants will try to read between the lines of the RBI's monetary policy. Given that economic activity has not yet returned to pre-pandemic levels, the RBI is unlikely to remove the economy's training wheels. Any deviation from this stance, however, may result in whipsaw movements. Furthermore, with OPEC meeting to determine output for November, market participants should brace themselves for greater volatility in crude oil prices. Besides that, the Fed will be looking at the US jobs statistics, which will be announced at the end of the week, to determine their next moves on tapering. This caution may migrate to Indian markets, and investors are advised to be selective in their stock picks.
Palak Kothari, Research Associate at Choice Broking | On the technical front, the Index has given a breakdown of the rising trendline and given closing below the same, which suggests some correction can come. On a daily chart, the index has been trading with lower high, lower low formation, which indicates weakness in the counter. Moreover, the index has started to trade below 21 DMA, which adds weakness in the counter. At present, the Nifty has immediate support at 17,400 while resistance comes at 17,750 levels.
Palak Kothari, Research Associate at Choice Broking | On the technical front, the Index has given a breakdown of the rising trendline and given closing below the same, which suggests some correction can come. On a daily chart, the index has been trading with lower high, lower low formation, which indicates weakness in the counter. Moreover, the index has started to trade below 21 DMA, which adds weakness in the counter. At present, the Nifty has immediate support at 17,400 while resistance comes at 17,750 levels.
Vinod Nair, Head of Research at Geojit Financial Services | In the coming week, the RBI is scheduled to announce its monetary policy. The Central Bank is expected to maintain its accommodative stance to maintain adequate liquidity in the system and to support economic activity. India’s service PMI is also due to be released next week.
Vinod Nair, Head of Research at Geojit Financial Services | In the coming week, the RBI is scheduled to announce its monetary policy. The Central Bank is expected to maintain its accommodative stance to maintain adequate liquidity in the system and to support economic activity. India’s service PMI is also due to be released next week.
Rohit Singre, Senior Technical Analyst at LKP Securities | Going forwards index has formed supports near 17,450-17,400 zone and if managed to sustain above said levels one can expect a decent pullback towards immediate & strong hurdle zone of 17,620-17,740, where one can lock immediate profit in longs, also the overall range for the Nifty is coming in between 17,300-1,8000 zone.
Rohit Singre, Senior Technical Analyst at LKP Securities | Going forwards index has formed supports near 17,450-17,400 zone and if managed to sustain above said levels one can expect a decent pullback towards immediate & strong hurdle zone of 17,620-17,740, where one can lock immediate profit in longs, also the overall range for the Nifty is coming in between 17,300-1,8000 zone.
Mohit Nigam, Head - PMS, Hem Securities | Going forward, markets could witness action in IT stocks ahead of upcoming results, while auto could show recovery from these levels as the festive season kicks in. Pharma also looks to be another corner on the basis of technical grounds. Nifty50 should find near term support near 17,400 whereas resistance levels could be 17,700.
Mohit Nigam, Head - PMS, Hem Securities | Going forward, markets could witness action in IT stocks ahead of upcoming results, while auto could show recovery from these levels as the festive season kicks in. Pharma also looks to be another corner on the basis of technical grounds. Nifty50 should find near term support near 17,400 whereas resistance levels could be 17,700.
Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services | Markets are likely to continue with its consolidation amidst weak global cues. Investors continue to fret over multiple factors, including persistently high inflation, the fresh rise in Covid cases globally, Chinese regulatory headwinds, supply chain bottlenecks and fading fiscal stimulus. Though the domestic cues remain positive as the fresh Covid cases continue with its declining trend resulting in increasing economic activities, the stratospherically high valuations along with multiple global concerns would keep markets highly volatile. Amidst this backdrop, intermittent profit booking is likely to continue and investors would keep trying to move towards under-valued stocks from outperforming sectors. Small traders should be cautious and adopt stock specific approach. Investors can adopt buy on dip strategy as the long term fundamentals remain intact.
Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services | Markets are likely to continue with its consolidation amidst weak global cues. Investors continue to fret over multiple factors, including persistently high inflation, the fresh rise in Covid cases globally, Chinese regulatory headwinds, supply chain bottlenecks and fading fiscal stimulus. Though the domestic cues remain positive as the fresh Covid cases continue with its declining trend resulting in increasing economic activities, the stratospherically high valuations along with multiple global concerns would keep markets highly volatile. Amidst this backdrop, intermittent profit booking is likely to continue and investors would keep trying to move towards under-valued stocks from outperforming sectors. Small traders should be cautious and adopt stock specific approach. Investors can adopt buy on dip strategy as the long term fundamentals remain intact.
Rakesh Patil
first published: Oct 4, 2021 08:11 am

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