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Volatility likely to continue as investors await LIC IPO, US Fed, BoE meetings, earnings and auto sales data: Experts

Overall structure suggests that Nifty can continue to consolidate in the range of 17000-17400 & once the swing low of 16958 is breached then the index can tumble down towards 16600, says Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas.

May 02, 2022 / 06:39 AM IST
The Indian equity market ended with marginal loss in a highly volatile week ended April 29. The BSE Sensex was down 136.28 points (0.23 percent) at 57,060.87, while the Nifty50 was down 69.45 points (0.40 percent) at 17,102.5.
The Indian equity market ended with marginal loss in a highly volatile week ended April 29. The BSE Sensex was down 136.28 points (0.23 percent) at 57,060.87, while the Nifty50 was down 69.45 points (0.40 percent) at 17,102.5.
Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services | Going ahead, volatility is likely to continue as the focus will shift to central bank policy meetings at both the US Federal Reserve and the Bank of England. Apart from, this slew of economic data release, monthly auto sales data and ongoing earnings season will keep investors busy. The mother of all IPO - LIC will also hit Dalal Street on 4th May 2022 which could pull out liquidity from the market and exert some selling pressure.
Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services | Going ahead, volatility is likely to continue as the focus will shift to central bank policy meetings at both the US Federal Reserve and the Bank of England. Apart from this, a slew of economic data releases, monthly auto sales data and ongoing earnings season will keep investors busy. The mother of all IPO - LIC will also hit Dalal Street on 4th May 2022 which could pull out liquidity from the market and exert some selling pressure.
 Sameet Chavan, Chief Analyst-Technical and Derivatives, Angel One | We continue to remain hopeful as long as 16900 – 16800 are defended successfully. Now with the last two weeks of range-bound movement, the daily time frame chart exhibits a ‘Triangle’ pattern and prices are inching closer to their apex point. Hence, the breakout in either direction is imminent. As of now, we expect it to happen in the northward direction where 17400 – 17450 are the levels to watch out for. The moment we surpass this, we could see a lot of individual stocks participating in the next leg of the rally. This view would be negated if the index slides and sustains below the lower range. Most of the key indices are placed at a crucial juncture and they are waiting for some trigger to make a move. We hope to witness a much-awaited breakout in the early part of May which will certainly bring back a wider smile in the traders’ fraternity.
Sameet Chavan, Chief Analyst-Technical and Derivatives, Angel One | We continue to remain hopeful as long as 16900 – 16800 are defended successfully. Now with the last two weeks of range-bound movement, the daily time frame chart exhibits a ‘Triangle’ pattern and prices are inching closer to their apex point. Hence, the breakout in either direction is imminent. As of now, we expect it to happen in the northward direction where 17400 – 17450 are the levels to watch out for. The moment we surpass this, we could see a lot of individual stocks participating in the next leg of the rally. This view would be negated if the index slides and sustains below the lower range. Most of the key indices are placed at a crucial juncture and they are waiting for some trigger to make a move. We hope to witness a much-awaited breakout in the early part of May which will certainly bring back a wider smile in the traders’ fraternity.
Ruchit Jain, Lead Research, 5paisa.com | As of now, the prices are trading within the flag pattern but it would be crucial to see how the index moves in the coming week. In case the Nifty breaches the support end of 16825, then that would led to a sharp correction in the short term. On the flipside, 17380-17420 has now become a strong hurdle which needs to be surpassed for any positivity. Till the index is trading below this resistance end, we advise traders to stay cautious and avoid aggressive positions. If we combine the technical structure with the derivatives data, then the derivatives data too does not hint at any optimistic picture as the rollovers in both Nifty and Bank Nifty were lower than their averages and FII’s too have rolled over their short positions in the index futures segment. Hence, one needs to be cautious until the data and the trend changes. Amongst sectoral indices, none of the index is showing significant strength to drive the markets higher in the short term. The Bank Nifty index is consolidating in a triangle with important boundaries placed at 37000-35500. A breakout from either side would then lead to directional move in direction of the breakout and hence could be the leading sector to drive the benchmark in that direction.
Ruchit Jain, Lead Research, 5paisa.com | As of now, the prices are trading within the flag pattern but it would be crucial to see how the index moves in the coming week. In case the Nifty breaches the support end of 16825, then that would led to a sharp correction in the short term. On the flipside, 17380-17420 has now become a strong hurdle which needs to be surpassed for any positivity. Till the index is trading below this resistance end, we advise traders to stay cautious and avoid aggressive positions. If we combine the technical structure with the derivatives data, then the derivatives data too does not hint at any optimistic picture as the rollovers in both Nifty and Bank Nifty were lower than their averages and FII’s too have rolled over their short positions in the index futures segment. Hence, one needs to be cautious until the data and the trend changes. Amongst sectoral indices, none of the index is showing significant strength to drive the markets higher in the short term. The Bank Nifty index is consolidating in a triangle with important boundaries placed at 37000-35500. A breakout from either side would then lead to directional move in direction of the breakout and hence could be the leading sector to drive the benchmark in that direction.
Amol Athawale, Deputy Vice President - Technical Research, Kotak Securities | Technically, the market is holding higher bottom formation but at the same time it is consistently taking resistance near 17,400. The sell-off is indicating a strong possibility of short-term correction in the near future as the current market texture remains volatile and non-directional. For the bulls, the 200-day SMA or 17300 would act as a crucial resistance level and above the same, the Nifty could move up to 17400-17550 levels. On the flip side, 17000 and the 50-day SMA are the two important support levels for the index and below 17k, another correction wave up to 16900-16800 is not ruled out.
Amol Athawale, Deputy Vice President - Technical Research, Kotak Securities | Technically, the market is holding higher bottom formation but at the same time it is consistently taking resistance near 17,400. The sell-off is indicating a strong possibility of short-term correction in the near future as the current market texture remains volatile and non-directional. For the bulls, the 200-day SMA or 17300 would act as a crucial resistance level and above the same, the Nifty could move up to 17400-17550 levels. On the flip side, 17000 and the 50-day SMA are the two important support levels for the index and below 17k, another correction wave up to 16900-16800 is not ruled out.
Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas | Overall structure suggests that Nifty can continue to consolidate in the range of 17000-17400 & once the swing low of 16958 is breached then the index can tumble down towards 16600.
Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas | Overall structure suggests that Nifty can continue to consolidate in the range of 17000-17400 & once the swing low of 16958 is breached then the index can tumble down towards 16600.
Yesha Shah, Head of Equity Research, Samco Securities | Globally, the FOMC meeting will be in the limelight and it is widely expected that a 50 basis points hike is on the cards. As market participants attempt to read between the lines of Fed’s policy actions, any surprises can result in panic reactions in global markets. In addition, the unemployment rate in US will also be monitored closely. Back home, the largest IPO, LIC, is poised to go public. Considering the mammoth issue size, the IPO is expected to test investors’ appetite and the liquidity routed towards the IPO can mildly influence secondary markets. Also, the monthly auto sales numbers are likely to attract the attention of investors seeking to anticipate future patterns in auto stocks. All these events coupled with the current earnings season can make markets choppy next week. If markets witness any major dips, investors are advised to use them to accumulate resilient stocks.
Yesha Shah, Head of Equity Research, Samco Securities | Globally, the FOMC meeting will be in the limelight and it is widely expected that a 50 basis points hike is on the cards. As market participants attempt to read between the lines of Fed’s policy actions, any surprises can result in panic reactions in global markets. In addition, the unemployment rate in US will also be monitored closely. Back home, the largest IPO, LIC, is poised to go public. Considering the mammoth issue size, the IPO is expected to test investors’ appetite and the liquidity routed towards the IPO can mildly influence secondary markets. Also, the monthly auto sales numbers are likely to attract the attention of investors seeking to anticipate future patterns in auto stocks. All these events coupled with the current earnings season can make markets choppy next week. If markets witness any major dips, investors are advised to use them to accumulate resilient stocks.
Prashanth Tapse, Vice President (Research), Mehta Equities | Nifty witnessed a gravitational pull, unable to take morning optimism in its stride, as it faltered in Friday’s late trade after WTI oil spiked to $106 a barrel on reports that Germany has dropped its opposition to EU ban on crude imports from Russia. Traders also fear on implementation of new F&O margin rule levied from Monday (2nd May) followed by US Fed reserve interest rate hike meeting scheduled on 3&4th May-22. As per markets readings Fed will raise interest rates in the range of 50-75 bps. Technically, the line in the sand is at Nifty’s support at 16807 mark. Below the level, the index could swiftly move to 16597 and then aggressive inter-month targets at 14251-14500 zone.
Prashanth Tapse, Vice President (Research), Mehta Equities | Nifty witnessed a gravitational pull, unable to take morning optimism in its stride, as it faltered in Friday’s late trade after WTI oil spiked to $106 a barrel on reports that Germany has dropped its opposition to EU ban on crude imports from Russia. Traders also fear on implementation of new F&O margin rule levied from Monday (2nd May) followed by US Fed reserve interest rate hike meeting scheduled on 3&4th May-22. As per markets readings Fed will raise interest rates in the range of 50-75 bps. Technically, the line in the sand is at Nifty’s support at 16807 mark. Below the level, the index could swiftly move to 16597 and then aggressive inter-month targets at 14251-14500 zone.
Ajit Mishra, VP Research. Religare Broking | The coming week is a holiday-shortened one and it’s going to be critical as some of the important events and data are lined up. Participants will first react to the auto sales numbers. On the macro front, markets will be eyeing Manufacturing PMI and Services PMI data on May 2 and May 5 respectively. The much-awaited IPO of insurance behemoth, LIC, is opening for subscription on May 4. On the global front, the US Fed meeting outcome will be in focus. Markets are discounting a 50 bps rate hike this time and the focus would be on their commentary on the quantum of rate hikes ahead. It’s almost two weeks under consolidation but markets are not offering any cue over the next directional move. We suggest waiting for a decisive breakout from the 16,800-17,300 zone in Nifty. Meanwhile, participants should limit positions and focus on identifying the sectors/themes which are showing resilience amid the consolidation bias. Investors, on the other hand, shouldn’t look much into the short term fluctuations and keep a close watch on the earnings for cues.
Ajit Mishra, VP Research. Religare Broking | The coming week is a holiday-shortened one and it’s going to be critical as some of the important events and data are lined up. Participants will first react to the auto sales numbers. On the macro front, markets will be eyeing Manufacturing PMI and Services PMI data on May 2 and May 5 respectively. The much-awaited IPO of insurance behemoth, LIC, is opening for subscription on May 4. On the global front, the US Fed meeting outcome will be in focus. Markets are discounting a 50 bps rate hike this time and the focus would be on their commentary on the quantum of rate hikes ahead. It’s almost two weeks under consolidation but markets are not offering any cue over the next directional move. We suggest waiting for a decisive breakout from the 16,800-17,300 zone in Nifty. Meanwhile, participants should limit positions and focus on identifying the sectors/themes which are showing resilience amid the consolidation bias. Investors, on the other hand, shouldn’t look much into the short term fluctuations and keep a close watch on the earnings for cues.
Rakesh Patil
first published: May 2, 2022 06:39 am
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