Another disappointing opening on the cards for domestic markets

K. S. Badri Narayanan | | Updated on: Jan 21, 2022
28/05/2019 MUMBAI:  The new breand identity for Nifty Indices launch at the National Stock Exchange in Mumbai on May 28, 2019.  Photo By. Paul Noronha

28/05/2019 MUMBAI: The new breand identity for Nifty Indices launch at the National Stock Exchange in Mumbai on May 28, 2019. Photo By. Paul Noronha | Photo Credit: PAUL NORONHA

SGX Nifty indicates 140-point gap down for Nifty

The week is likely to end on bearish note with strong negative signals emanating from global equity markets. SGX Nifty at 17,770 indicates another 140-point gap-down opening for Nifty on Friday, as Nifty futures slumped further to 17,808.

Despite the yield on the US 10-year treasuries declining two basis points to 1.78 per cent, markets across the globe are nervous due to geopolitical tensions (Russia-Ukraine) and the recent drone attack in Abu Dhabi.

Analysts, however, expect the market to find the bottom soon, as the phase of the fall is quite quick. Market experts believe that institutions which are offloading Indian equities currently will soon stop their aggressive selling and may accumulate quality stocks, as some of them appear value buying post correction.

"The street fears that the US Federal Reserve will have to accelerate further its tightening pace. Also, breaking the back of this bullish market are rising oil prices which have jumped to a 7-year high amidst supply concerns and drone strikes," said Prashant Tapse, Vice-President (Research) at Mehta Equities.

Asia-Pacific markets decline

Asian markets are in deep red in early trade on Thursday tracking US stocks, which after opening on firm note on Thursday, slumped around one per cent, as investors are yet to gain confidence in equities.

Japan's Nikkei, Korea's Kospi, Taiwan Weighted Index and Australia's All Ordinaries tumbled between 1 and 1.5 per cent in early deal.

Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities, said market sentiment turned further bearish as the specter of a rate hike by the US Fed continued to loom large, with the continuing flight of foreign capital from local bourses further dampening the sentiment.

Technical call on Nifty

According to Ajit Mishra, VP - Research, Religare Broking, markets are currently facing global headwinds and there’s no relief on the domestic front as well. "However, we feel it’s a healthy correction so far and expect Nifty to hold the 17,600 zone. For traders, the major challenge is to tackle the volatility amid the earnings season. We feel it’s prudent to limit positions and prefer a hedged approach until markets resume the uptrend. Investors, on the other hand, shouldn’t worry much about the recent fall and maintain their focus on accumulating quality stocks on dips."

According to Shrikant Chouhan, "The Nifty broke the important support of 17,900 while the intraday formation is still weaker. For traders, the 20-day SMA or 17,700 would be the sacrosanct support level. Trading above the same, a pullback rally could lift the index up to 17,850-17,900 levels. However, a fall below 17,700 could see the index retest the level of 17,650-17,600."

Published on January 21, 2022
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