Sensex, Nifty end lower amid volatility post hawkish US Fed commentary; Nifty support at 17500

BSE Sensex and NSE Nifty 50 ended in red on Thursday, as investors reacted to the 75bps interest rate hike by the US Federal Reserve. Moreover, the weekly F&O derivatives expiry added to the volatility in the stock market. BSE Sensex fell 337 points or 0.6 per cent to 59,120, while NSE Nifty 50 was down 89 points or 0.5 per cent to settle at 17630. Stocks of HDFC Bank, ICICI Bank, Reliance Industries Ltd (RIL), Housing Development Finance Corporation (HDFC), Axis Bank among others contributed the most to the indices’ loss. The broader market indices outperformed the equity frontliners. S&P BSE Midcap gained 0.3 per cent or 82 points to settle at 25,860, while S&P BSE SmallCap index added 0.5 per cent or 138 points to finish at 29,377. Bank Nifty index tumbled 1.4 per cent to settle at 40,631.

Also read: US Federal Reserve may hike interest rate by 75bps yet again in November; FOMC unlikely to cut rates in 2023

Indian markets reacted mainly to the US Federal Reserve’s hawkish undertone on interest rate that fuelled pessimism amongst the investors. As expected, banking stocks bore the brunt that led to extended correction in local benchmarks. Technically, Nifty has formed lower top formation on daily and intraday charts and closed below the 20-day SMA (Simple Moving Average), indicating continuation of weakness in the near future. The index has been consistently facing resistance at higher levels and at the same time regularly taking support near the 17500 level. For the traders 17500 and 17700 would be the important level to watch out for and below 17500, the index could slip till 17400-17350 levels. On the flip side, a range breakout over 17700 could push the index up to 17800-17850.

Kunal Shah, Senior Technical Analyst, LKP Securities

The Bank Nifty index witnessed selling pressure at higher levels and remains in a sell-on-rise mode as long as it stays below the level of 42,000. The index immediate downside support stands at 40,500 and a breach below this will open gates for further downside toward the 39,000 level. The index is trading in a tight range between 40,000-42,000 and a break on either side will give a directional move to the index.

Also read: India’s GDP to grow at 7.5% in FY23 despite developed-economy recession; inflation to stay above 6% till Nov

Vinod Nair, Head of Research, Geojit Financial Services

The Fed turned more hawkish than anticipated, increasing its rate forecast to 4.4% by the end of 2022. The indication is that 125bps more rate hikes can be expected in the next 2 policy meetings scheduled this year. Following this, the US dollar index rose above 111, depreciating INR to beyond 80. The Indian stock market was able to sustain its resilience with limited cuts but if the rupee continues its weakness the domestic market would turn less attractive for foreign investors in the short-term, affecting performance.

Palak Kothari, Senior Technical Analyst, Choice Broking

On the technical front, the Nifty has been trading with Lower Highs & Lower Low formation for the last 3 trading sessions on a daily basis which has weakness in the counter for an upcoming session. Furthermore, Nifty formed a Doji candle on a daily chart which points out the confusion between buyer & seller. Nifty has been facing resistance from 21 DMA as well as the middle band of Bollinger which adds bearishness to the prices. On the OI Data, On the call side, the highest was witnessed at 17800 while on the put side was at 17500 level. The daily momentum indicator MACD was trading with a negative crossover which points out the weakness in the counter. The support for nifty has shifted around 17500 levels while on the upside 17800 may act as an immediate hurdle. On the other hand, Bank nifty has support at 40000 levels while resistance at 41500 levels. Overall, the Nifty is looking volatile for an upcoming session. Nifty may find support around 17500 levels while breaching below will open the gate for 17380-17200 levels