Will bulls stage a comeback or bears drag Nifty to 17150? 5 things to know before share market opening bell

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Indian stock market is likely to open in green on Monday as trends in the SGX Nifty hinted at a positive start for Indian benchmark indices, with a gain of 43 points. In the previous session, the BSE Sensex fell nearly 1,100 pts to 58,841, while the NSE Nifty 50 plunged around 350 pts to 17,531. “Indian markets were the worst performers in the Asian pack on Friday, as higher inflation and likely aggressive rate hikes by the US Fed sent stocks tumbling across the board. We are likely to see strong bouts of volatility in the coming sessions as global slowdown looms large. Technically, the double top formation on daily and intraday charts and bearish candle on weekly charts is indicating further weakness from current levels,” said Amol Athawale, Deputy Vice President – Technical Research, Kotak Securities.

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Nifty technical view: “A long bear candle was formed on the daily chart, that has engulfed the last 9-10 sessions range movement with positive bias in the last two sessions. Technically, this faster retracement on the downside could mean more weakness for the market ahead. Nifty on the weekly chart formed a long range bear candle with the bearish candle formation like dark cloud cover. Last week’s chart pattern confirms a false upside breakout of the significant resistance of down trend line at 17900 levels. The short term trend of Nifty seems to have reversed down. The formation of bearish candlestick pattern on the daily and weekly chart indicates more weakness ahead for the market,” said Nagaraj Shetti, Technical Research Analyst, HDFC Securities.

Levels to watch for: “Markets have shown tremendous strength so far amid the global turmoil however the lingering fear of aggressive rate hikes by the US Fed has capped the upside and also trigger intermediate declines. The prevailing market structure combined with cues from the US markets is pointing towards further fall. A breakdown below 17,500 in Nifty could push the index to the 17,150 zone. In case of any rebound, the 17,800-18,100 zone would act as a hurdle. We feel participants should stay light and maintain positions on both sides. Amid all, we reiterate our preference for private banking counters and suggest using correction to accumulate them in a staggered manner. On the flip side, IT and pharma look weak to us and can be considered for short trades,” said Ajit Mishra, VP – Research, Religare Broking.

Trade Setup: “The Indian market performance showed resilience in the last couple of months and outperformed the major global market by a superior margin. We believe macroeconomic factors will continue to influence the market, and in the near term, market performance will be range bound. We could see the reaction in both directions. On Friday, we saw weakness in the equity ahead of the FED meeting scheduled this week. We believe the market is likely to be volatile in the near term as the global central bank could surprise the market by raising interest rates beyond the market’s current estimates,” said Neeraj Chadawar, Head – Quantitative Equity Research, Axis Securities.

“The current setup is a ‘Buy on dips’ market, and investors should use volatility in the coming weeks in a phased manner to build a position with a view of 12-18 months in quality companies where earnings visibility is very high. In this context, domestic-oriented themes like Banks, FMCG, Hospitals, Domestic Industrials, and Discretionary consumption are well placed over export + cyclical-oriented themes,” he added.

Also Read: US FOMC meeting preview: Fed may announce 50-75 bps rate hike in Sep monetary policy as inflation persists

Stocks under F&O ban on NSE: Indiabulls Housing Finance, India Cements, PVR, and RBL Bank are the four equities under the NSE F&O ban list for September 19. Securities thus banned under the F&O segment include companies where derivative contracts have crossed 95 per cent of the market-wide position limit.