Volatility likely to persist amid inflation data, earnings, upcoming IPOs
Technically, the Nifty is consistently trading below 200-day and 50-day SMA which is broadly negative. In addition, on weekly charts it has formed a long bearish candle, which supports further weakness from the current levels, says Amol Athawale, Deputy Vice President - Technical Research, Kotak Securities.
Indian market lost 4 percent in the week ended May 6 after a surprise rate hike by the Reserve Bank of India (RBI) and weakness in the global markets following the US Federal Reserve and ECB's decision to raise interest rates to curb the soaring inflation that hit economic growth.
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Vinod Nair, Head of Research at Geojit Financial Services | In the coming week, the market will track inflation numbers across the globe. Although the numbers will remain high, the chances of a major market reaction are low given that the impact has already been factored in. In this range-bound market, it is advised to stick with sectors that are expected to be least impacted by inflation & yield rise like banking, IT, Pharma, and themes like green energy.
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Yesha Shah, Head of Equity Research, Samco Securities | Given a slew of macroeconomic releases, the current result season, and several IPOs that will open for subscription, the volatility seen this week is expected to persist. Global market movements will be determined by inflation numbers of the United States and China. Data on India's industrial output, domestic inflation rates, and manufacturing output will keep Indian markets on edge. Following the surprise interest rate hike by the RBI, Indian inflation is largely predicted to be about 7.4%-7.5%, far more than the central bank's acceptable limit. However, a higher-than-expected inflation figure might worsen present sentiment. Investors are therefore advised to keep a long-term horizon and be extremely selective with their picks. The index is now trading just at the previous support of 16,400. The short-term trend has turned bearish and it is likely that markets can further slide lower. Having said this, if we look at the larger picture, the benchmark index has been trading mostly in a wider range of 16,400 to 18,400 since October. Therefore, a bounce from current levels also cannot be ruled out. Keeping this in mind, traders are advised to avoid initiating fresh shorts at current levels. Traders can maintain a neutral to mild negative bias and look for sell-on-rise opportunities. The immediate support and resistance are now placed at 16,000 and 16,800 levels.
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Ruchit Jain, Lead – Research, 5paisa.com | As of now, the trend continues to remain negative and the ‘RSI’ oscillator on the daily chart is not yet into the oversold zone to attempt for a reversal. The momentum oscillator on the lower time frame chart is in the oversold zone and hence we could have some in between pullbacks, but such pullback moves are likely to get sold into and hence, traders should continue to stay cautious. The ’20 EMA’ on the hourly chart has acted as a resistance in the last few sessions which is now placed around 16640 and is the hurdle to Nifty. On the flipside, the bearish pattern has given a target projection of 16125 and thus 16200-16125 would be range to watch out for.
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Sameet Chavan, Chief Analyst-Technical and Derivatives, Angel One | If we take a glance at the daily time frame chart, we can see the ‘Pennant’ pattern target in the vicinity of 16200 – 16000, which is not far away from the current level. Hence, we would rather wait for some reversal in the coming week. On the higher side, 16500 followed by 16700 are the immediate levels to watch out for. Let’s see how things pan out globally and be hopeful for some sustainable relief on that front.
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Amol Athawale, Deputy Vice President - Technical Research, Kotak Securities | The market is in a dilemma that in a rising interest rate scenario, a more hawkish stance by the RBI going ahead could hurt growth. Technically, the Nifty is consistently trading below 200-day and 50-day SMA which is broadly negative. In addition, on weekly charts it has formed a long bearish candle, which supports further weakness from the current levels. On intraday charts the index is consistently holding a lower top formation that also supports short term weakness. For the traders, 16300 would be the key support level. However, a quick intraday pullback rally is not ruled out if the index succeeds to trade above 16300. Above the same, the pullback rally could continue up to 16550-16700. Below 16300, selling pressure is likely to intensify, and below the same the Nifty could touch the level of 16150-16000.
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Ajit Mishra, VP - Research, Religare Broking | Markets will react to Reliance numbers in early trade on Monday and then focus would shift to the global cues. The increasing fear of aggressive rate hikes from the US Fed has spooked investors across the globe including India. On the index front, the Nifty has tested the crucial support zone of 16,400 and indications are in the favour of prevailing decline to continue with some intermediate pause/rebound. In case of any rebound, the 16650-16800 zone would act as a hurdle. Participants should align their positions accordingly and use rebound to create shorts.
