25 Apr , 2022 By : monika singh
Bears returned to Dalal Street amid weak global cues, forcing headline indices to close with losses. Equity benchmarks Sensex declined over 1100 points for the second week in a row, dragged by losses in information technology, banking and realty stocks, amid geopolitical uncertainty and fears of faster monetary tightening after hawkish comments from U.S. Federal Reserve Chair Jerome Powell, reactions to March-quarter earnings. US Federal Reserve Chair Jerome Powell said Thursday that a 50 basis point rate increase is possible at its upcoming meeting in early May.
Inflation concerns, geopolitical tensions leading to supply snags and volatility in crude oil prices and IMF’s lowering of growth from 9% to 8.2% estimates also added weighed on sentiment. Sensex and Nifty snapped a two-week winning streak. The concern of rising pandemic cases in China and continued FIIs selling dampen the market sentiment. Moreover, poor quarterly results, and soaring Indian bond yield have a negative impact in the market. FIIs were net sellers over Rs 18000 crore while DIIs were net buyers over Rs 14000 crore this week. Banking stocks declined on account of rising bond yield. India’s G-Sec Yield surged by 2bps to close 3-year high at 7.16%.
Expect market to be highly volatile this week on account of global market volatility and the April series F&O expiry. Market trend will be determined by the quarterly results, global markets trend, oil price and geopolitical factors. The recent trend of the market was due to the release of high inflation data, the uncertainty surrounding Russia -Ukraine peace talks, volatile crude prices, weak quarterly results and US Fed aggressive stance on rate hike.
Risk assets globally were under pressure after Fed Chair Jerome Powell outlined his most aggressive approach to taming inflation to date, potentially endorsing two or more half percentage-point interest-rate increases. The rise in rates has already hurt frothier growth-linked technology stocks, and broader global equity markets could also come under pressure from any uptick in real yields to 3-year high at 2.9% on account of inflation spiked to 40-year high.
The extent of the slide in stock markets suggests that after Powell’s comments traders are worried the Fed might go harder for longer. The tone of his remarks could have been taken that while markets aren’t concerned about a 50 basis-point-hike in May, which is already priced in.
Nifty has been very volatile throughout the week. However, it has held its key retracement level around 16900 and managed to close above the 17000 mark. Going forward, major support for the index stands at 16900-16666 On the flipside, we can expect the index to find resistance at higher levels around 17350-17500.
Hindalco has given a trendline breakdown on the daily scale with a bearish candle and has been sustaining below the same and showing weakness. There is loss of momentum across the metal space which will keep the prices under pressure. RSI oscillator is also negatively placed on the daily and weekly scale. Considering the current chart structure, we advise traders to sell the stock for a down move towards 480 with a stop loss 530.
Reliance has taken support between 23.6% to 38.20% retracement of the recent rise and has started the next leg of up move. It has formed a bullish candle on the daily scale indicating buying interest. RSI oscillator is also positively placed on the daily and weekly scale. 3 Considering the current chart structure, we advise traders to buy the stock on small dip for an up move towards 2900 with a stop loss of 2660.
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