Nifty forms Doji pattern ahead of F&O expiry

The Nifty50 on September 28 extended weakness for the sixth consecutive session to hit a two-month low, and closed below the psychological 17,000 mark with a nearly one percent loss, ahead of a day of monthly expiry of September futures and options contracts, tracking consistent nervousness in global counterparts.

The index has formed a Doji kind of pattern on the daily charts as the closing was near its opening levels, indicating the indecisiveness among bulls and bears about the future market trend. The index is near its crucial support level of 16,800-16,700, and if that gets broken then there could be further sharp selling in the market; otherwise, 17,000 is going to act as immediate resistance, experts said.

Banking and financial services, metal, oil and gas, and select FMCG stocks weighed down the market, while the broader markets also traded lower with the Nifty Midcap 100 and Smallcap 100 indices falling a third of a percent and half a percent respectively.

The Nifty50 opened lower at 16,870 and remained under pressure for a major part of the session to hit the day's low of 16,820. The index ended with 149 points loss at 16,859.

"Technically, we are of the view that 17,000 would act as an immediate resistance level, below which, the correction wave is likely to continue till 16,700-16,650," Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities said.

Inflation shifts investor attention away from China slowdown, says economist

A generational surge in inflation in advanced economies is stealing the attention of investors from a generational slowdown in China that is arguable of much greater importance for the long-term global outlook, according to the Group Chief Economist at Capital Economics.

"We recently lowered our forecast for this year's officially reported GDP growth rate to 3 percent from 4 percent – the government's 5.5 percent target set in March has been quietly abandoned – but in reality don't expect the Chinese economy to grow at all," Neil Shearing said in a note.

"The conventional response in Beijing to such weakness would be to loosen policy. But the past week has again revealed the constraints under which policymakers in China are operating."

China's zero-Covid policy has hurt growth in recent months even as a slowing global economy weighs on demand for its exports. Central banks across the world are also tightening monetary policy at a sharp pace to curb red-hot inflation, further exacerbating growth woes.

Financial markets have whipsawed. The S&P 500 sank to the lowest since December 2020 overnight and the US Treasury yields continued to rise, with the 10-year rate climbing to the highest since April 2010.

After a decade-long run of giddying expansion, mounting evidence of bad economic news from China reflects a structural slowdown that's now in full train. Investors can be forgiven for having more immediate concerns on their mind, but they should be paying attention."

Amid a surge in the dollar, the People's Bank of China is trying to prevent the renminbi from going much beyond the seven-to-a-dollar level. The Chinese central bank on Monday hiked the reserve ratio for currency forwards, a move aimed at deterring speculation against the renminbi.

While there is nothing sacrosanct about the seven-to-a-dollar level, it is the line in the sand that policymakers appear to have drawn amid concerns that an overt weakening of the currency could encourage capital outflows, which would, in turn, destabilize the domestic financial system, Capital Economics said.

What Brokerage said on Selling on fourth day that drag Nifty below 17,000

Om Mehra, Technical Associate at Choice Broking

 The Indian market takes another step lower, chasing the global nod. Investors remained nervous as the RBI may follow the lead of global counterparts, including the US Federal Reserve, and raise interest rates on Friday to tame stubborn inflation. The rupee fell 0.68 percent against the US dollar on Monday, reaching a new low of 81.66.

In the short-term, markets can remain volatile following the global macroeconomic uncertainty and rising interest rates. Nifty has breached psychological 17000 levels, as 17250-17320 will now act as immediate resistance, whereas support is placed around the 16800 levels.

Ajit Mishra, VP - Research, Religare Broking:

Markets slumped sharply lower and lost nearly 2%, in continuation of Friday’s decline. Weak global cues weighed the sentiment in the early trades, leading to a gap-down start, followed by volatile swings till the end.

Finally, the Nifty index settled closer to the day’s low to close at 17,016 levels. The selling pressure was widespread and all the sectoral indices, barring IT, ended deep in the red. The broader indices also traded in tandem with the trend and lost over 3% each.

With no respite on the global front and a resumption of selling from foreign investors, we expect markets to remain under pressure and test the 16,800-16,900 zone in Nifty. Select pockets from FMCG, pharma and IT are showing resilience while the majority are reeling under pressure. Participants should align their positions accordingly.

Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas:

The Nifty has been in a short term correction mode for the last couple of weeks. On September 26, it had a gap down opening on account of the global cues & had a follow through selling as well. On the way down, it breached the August swing low of 17166. The selling pressure was absorbed near the 200 DMA.

The index also has a support from a gap area of 16947-17018, which was formed in July on the daily chart. The index attempted an intraday bounce thereon however couldn’t have a sustainable recovery. On the higher side, 17200 is acting as a near term hurdle. On the flip side, if the Nifty breaches the gap area, then it can continue to slide till 16800.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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Selling on fourth day drag Nifty below 17,000, Sensex falls 953 pts

 The market continued to witness selling for the fourth straight session on September 26. It started the new week on a negative note, amid weak global cues and extended the losses as the day progressed. However, despite the intraday recovery, the market finished near the day's low point.
Selling across the sectors, except Information Technology (IT) and the rupee hitting a fresh record low (81.66) dragged the indices to a two-month low with the Nifty falling below 17,000, intraday.
At Close, the Sensex was down 953.70 points or 1.64% at 57,145.22, and the Nifty was down 311 points or 1.79% at 17,016.30.
"The soaring dollar as a result of aggressive monetary tightening, slowing economic growth and rising demand from cautious investors are causing turbulence in the global equity market. This is creating mayhem in the domestic market led by weakening INR, elevated bond yields and pessimistic trends of Asian peers," said Vinod Nair, Head of Research at Geojit Financial Services.
"Only the IT sector, which exhibited the weakest performance in the last 1yr, defied the trend in anticipation that the global recession is mostly factored in the price and are trading at reasonable valuations," he added.
Tata Motors, Adani Ports, Hindalco Industries, Maruti Suzuki and Eicher Motors were among the top losers on the Nifty. Gainers included HCL Technologies, Infosys, Asian Paints, Divis Labs and UltraTech Cement.
Among sectors, the Information Technology index added 0.5 percent, while all other sectoral indices ended in the red with Nifty Bank, Auto, FMCG, Metal and Pharma indices down 1-3 percent.
On the BSE, Auto, Power, Realty, Metal and Oil & Gas indices fell 3-4 percent, while Bank, Capital Goods and FMCG indices shed 2 percent each. However, the Information Technology index ended in the green.
Broader indices underperformed the main indices with the BSE Midcap index falling 2.84 percent and Smallcap indices declining 3.33 percent.
A short build-up was seen in RBL Bank, India Cements and Mahindra & Mahindra Financial Services, while a long build-up was witnessed in Metropolis Healthcare, Mphasis and Infosys.
Among individual stocks, a volume spike of more than 300 percent was seen in RBL Bank, Alkem and JSW Steel.
More than 100 stocks hit 52-week high, including Butterfly Gandhimathi Appliances, PC Jeweller, Westlife Development.
However, Aurobindo Pharma, TCS, Gland Pharma, Infosys, Morepen Laboratories, Mphasis, Persistent Systems, touched their 52-week low on the BSE.

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