Stock Market Highlights 22 Aug 2022: Nifty below 17500, Sensex down 900 points - How it happened
(By: Ravi kant Kumar)
The Indian market declined around one and half per cent amid profit-booking and weak global cues on Monday. Extending weakness to second straight day, the broader Nifty50 ended around 17,500, while the Sensex tanked nearly 800 points to settle close to 58, 800. The weakness was also seen in the broader market, where Nifty Midcap ended lower by over two per cent and the small cap indiex settled with more than one and half per cent cut. India Volatility Index (VIX) shot up to end at 19-mark with a change of over four per cent.
On the sectoral front, all indices ended in the red, with Nifty Metal, Auto and Realty taking the maximum heat on Tuesday. Tata Consumer, ITC, Britannia, Nestle India were among top gainers on the benchmarks.Tata Steel, Tata Motors, Adani Ports, Asian Paints, Divis Laboratories, Wipro and Ultratech cements were among top laggards
Consolidation was triggered in the market in anticipation of tighter monetary policy by the FED and worries over a slowdown in global economic activity, said Vinod Nair, Head of Research at Geojit Financial Services. "The current risk reward is not favouring investors as the Nifty50 is now trading at a premium valuation of 21.5x P/E (1yr fwd basis), above the long-term average. Rising dollar index and higher US10 year bond yield act as the near-term headwinds for the market," the expert added.
"The market is delicately poised with higher downward risk. The sustained FII buying is positive. But FIIs are unlikely to buy aggressively in the present context of rising dollar. The dollar index is back above 108 and the US 10-year bond yield is at 2.99%. This is negative for capital flows to emerging markets. India's impressive GDP growth and favorable leading indicators in the context of global growth slowdown have the potential to attract more FII flows but the rising dollar and bond yields are strong headwinds. Investors have to exercise caution. Medium to long-term investors can buy high quality banks on declines. Capital goods and autos are on a strong wicket," said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
(By: Ravi kant Kumar)
The Indian market declined around one and half per cent amid profit-booking and weak global cues on Monday. Extending weakness to second straight day, the broader Nifty50 ended around 17,500, while the Sensex tanked nearly 800 points to settle close to 58, 800. The weakness was also seen in the broader market, where Nifty Midcap ended lower by over two per cent and the small cap indiex settled with more than one and half per cent cut. India Volatility Index (VIX) shot up to end at 19-mark with a change of over four per cent.
On the sectoral front, all indices ended in the red, with Nifty Metal, Auto and Realty taking the maximum heat on Tuesday. Tata Consumer, ITC, Britannia, Nestle India were among top gainers on the benchmarks.Tata Steel, Tata Motors, Adani Ports, Asian Paints, Divis Laboratories, Wipro and Ultratech cements were among top laggards
Consolidation was triggered in the market in anticipation of tighter monetary policy by the FED and worries over a slowdown in global economic activity, said Vinod Nair, Head of Research at Geojit Financial Services. "The current risk reward is not favouring investors as the Nifty50 is now trading at a premium valuation of 21.5x P/E (1yr fwd basis), above the long-term average. Rising dollar index and higher US10 year bond yield act as the near-term headwinds for the market," the expert added.
"The market is delicately poised with higher downward risk. The sustained FII buying is positive. But FIIs are unlikely to buy aggressively in the present context of rising dollar. The dollar index is back above 108 and the US 10-year bond yield is at 2.99%. This is negative for capital flows to emerging markets. India's impressive GDP growth and favorable leading indicators in the context of global growth slowdown have the potential to attract more FII flows but the rising dollar and bond yields are strong headwinds. Investors have to exercise caution. Medium to long-term investors can buy high quality banks on declines. Capital goods and autos are on a strong wicket," said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
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Stock Market Summary
"The fear of aggressive rate hikes by apex banks has started haunting the participants again. Though the Nifty has re-entered the declining broadening pattern, we expect the index to respect 17,300 levels. Meanwhile, we recommend maintaining positions on both sides and giving preference to defensive especially FMCG for long trades while others are reeling under pressure."- Ajit Mishra, VP - Research, Religare Broking Ltd said,
Short-term momentum indicators in favor of the bears
The Nifty had formed a Shooting Star candlestick pattern on the weekly chart for the last week. Also, on the daily chart the index had seen few bearish developments on August 19. Thus, follow through action was witnessed on the downside on August 22. In the week gone by, the index had crossed a falling trendline; however, it couldn’t sustain in the higher territory & has tumbled below the trendline today. This shows that the bears are having upper hand currently. The short-term momentum indicators are also in favor of the bears. Thus, the index is likely to witness further decline in the coming sessions. It can test 17300 & 17000 on the downside. On the other hand, 17700-17750 will act as a near term hurdle zone.
Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas
Bears are alive and kicking. For the second consecutive day today, markets saw profit booking across the board just that it was more intense than Friday's. Benchmark index Nifty 50 after making a high of ~18k on Friday has corrected 500 points in just two trading sessions and closed at ~17500 today. Bank nifty continued to be the worse of the two indices and fell 1.8% or ~700 points for the day to close at ~38300. All other sectors like IT, pharma, auto, metal, etc. corrected too and ended 1-2% lower for the day. The sharp sell off in two trading sessions could be a sign of worry for bulls but it will be too early to call this an end of the bull run. Markets may consolidate from here before starting another leg up again.
Ashish Gupta, Volatility Trader and Derivatives Expert.
Stock Market LIve: Nifty50 Tech View
"Nifty slipped back below the falling trend line, indicating a failed breakout. On the lower end, the price has corrected towards the support zone of 17500-17400. Over the near term, a fall below 17400 may trigger a further correction in the market. On the lower end, support is visible at 17200/17000. On the other hand, the Nifty may recover towards 17700 if it doesn't fall below 17400," said Rupak De, Senior Technical Analyst at LKP Securities.
Stock Market Live: Bank Nifty outlook
"The Bank nifty index witnessed continuous selling pressure throughout the day with lower high and lower low formation. The immediate upside resistance is placed at 38500 and a break above this will see a rally toward the 38,800-39,000 zone. The downside support stands at 38,000 and if breached will see further selling pressure toward 37,700 levels," said Kunal Shah, Senior Technical Analyst at LKP Securities.
Crude oil price outlook, trigeers
Crude oil prices drift lower in European market hours to trade around $87.50 down 2.2%, following a weekly fall of 1.5% amid recessionary fear. The dollar index surge to five weeks high of 108 level, adding further pressure on oil prices. Last week prices fell to seven months as European Union finalise the Iran’s nuclear deal. Chinese central bank cut down interest rates of 1-year and 5-year lending to revive the shattering economy. On the other hand, eurozone blocs largest economy “German” records high factory inflation of 37% in July triggering a recessionary concern. The Jackson Hole symposium is likely to be in the spotlight this week, while traders should also keep an eye on reports on durable goods orders, new home sales, and personal income and spending later this week. Oil prices will still find some support due to lower inventories of commercial and distillate reserves, along with the struggling OPEC production. We expect crude oil prices to trade sideways for the day as lack of economic events will keep the volumes thin. WTI hold support at $85 and while resistance stays at $92.
Mohammed Imran, Research Analyst at Sharekhan by BNP Paribas
Nifty, Sensex op gainers and losers
Tata Consumers top gainer on Nifty50, while another Tata Group stock, Tata Steel was top loser on the 50-stock index. ITC, Nestle India were only gainers on the Sensex, while Tata steel remained top loser on the 30-share index as well
Gold outlook, trading strategy
Praveen Singh – AVP, Fundamental currencies and Commodities analyst at Sharekhan by BNP Paribas
Gold (CMP $1734 spot):
Gold is currently trading with a loss of around 0.80% as the US Dollar Index surges on numerous supportive factors.The Dollar Index has rallied above 108-mark to five-week high on hawkish Fed speech as the various Federal Reserve speakers have stressed at further aggressive rate hikes to tame inflation. Ten-year US yields are up nearly 40 bps from the cyclical low of 2.55%, reached at the time of a sudden rise in geopolitical risk premium due Ms. Pelosi’s visit to Taiwan. Markets are unwinding dovish Fed bets ahead of Fed’s Chair Powell’s ‘economic outlook’ speech scheduled for August 26 at Jackson Hole Symposium.
Dollar is getting further upward traction from concerns regarding the European economy as energy crisis deepens. Firmer Dollar can send gold further lower to test the psychological support at $1700. Interim support is at $1730, while resistance is seen at $1750/$1765.
Rupee outlook and strategy
USDINR (CMP Rs 79.8950 spot): Indian rupee remained flat today. Rupee opened with minor gains on weak crude oil prices and inflows by FIIs. However, the gains were shortlived and Rupee weakened on strong Dollar and risk aversion in domestic markets. Domestic equity markets are lower by approximately 1.25%. US Dollar gained on safe haven demand amid risk aversion in global markets and concerns over global economic slowdown and positive economic data from US. US Philly Fed Manufacturing Index gained to 6.2 in August from -12.3 in July.
US weekly unemployment claims fell to 250,000 for the week ended August 12 compared to 252,000 in the previous week. Fed officials James Bullard and Mary Daly were of the view that interest rates should be hiked further to control inflation. However, weak new home sales data capped sharp gains.
We expect Rupee to trade on deteriorating global risk sentiments and strong US Dollar. Worries over slowdown in global economic may also put downside pressure on Rupee. However, weak crude oil prices and FII inflows may support Rupee at lower levels.
Market participants may also remain cautious ahead of Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium later this week on cues over September monetary policy. USDINR spot price is expected to trade in a range of Rs 79.20 to Rs 80.50 in next couple of sessions.
Anuj Choudhary - Research Analyst at Sharekhan by BNP Paribas
Stock Market lates news:
Nifty, Sensex further slid as profit taking intensified in closing hours. The Nifty50 slipped below 17,500, while the Sensex declined by more than 800 points amid weak global cues. FMCG, the only gainer in early trade, ended in the red.
Stock Market live
The Indian market continues to trade lower by more than one per cent in late afternoon trade on Monday. The broader Nifty was trading at 17,557.05, lower by 201.40 (-1.13%), while Sensex stayed at 58,989.28, a drop of 656.87 points or 1.10%. sectorally, Nifty Metal and PSU Bank declined the most as all indices, except FMCG, slipped in the red
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