29 Aug , 2022 By : Monika Singh
After a good run in last month, we had quite expiry last week , markets taking the breather before the Jackson hole event , which was much needed to take a bulls for a pause before a run. Equity benchmark Index declined over 1% against the previous week close on a highly volatile this week on account of August series F&O expiry and investors remained cautious awaiting cues on Fed rate hike from a key Jackson Hole event. Nifty slipped 200 points or 1.20 percent to close at 17,559 while Sensex shed over 800 points or 1.4% to close at 58,834. Traders were booking profit due to global market weakness and relentless buying Indian equity in the last couple months (gained 18% Nifty). Defense stocks gained on account of strong domestic and overseas order book after the government announced to expand procurement of locally manufactured products in make in India process.
Metal stocks witnessed fresh buying on expectation of China may announce $146/bn stimulates to boost metal demand. Expect Indian bourse to react negatively next week after the US Federal Reserve Chair Jerome Powell’s hawkish inflation speech at the Jackson Hole meeting. Across the US and Europe, markets fell 2-4% yesterday after the US Federal Reserve Chairman Jerome Powell vowed to keep pressing the fight against inflation, even at the expense of economic growth. In a highly anticipated speech, Powell said the Fed must continue raising interest rates and keep them high until inflation is under control. His comments disappointed investors who had hoped that inflation has peaked out and thus Fed would shift from raising rates to lowering them sometime next year.
However, Jerome Powell signaled that interest rates will stay high for some time that could complicate its war against inflation. Expectation that the US Fed may hike more than 75bps interest rate in the next policy meeting and may continue till the inflation fell to reasonable level. US 10-Year bond closed above 3% while 2-year bond closed to nearly 3.4% on expectation of more pain in the short term. US Volatility Index (US Vix) spiked by 25% to close over 1-month high to 25.56% against the previous week while yesterday soared by 17?ter the US Fed statement. Ahead of the central bank’s next meeting, investors will parse the monthly US jobs report, due Sept. 2, for any sign that the tight labor market is easing. They will also get another reading on inflation.
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Back home, expect Indian markets to witness profit booking on account of weakness in the global markets. However, undertone bullish sentiment in the domestic market on account of stable inflation, 8?ove normal monsoon till 26th August according to IMD, continued FIIs buying interest and impressive quarterly results announcement, continues. This will be good opportunity to buy Indian bourses due to growth in Indian economy being the highest among the global peers. Recently, Indian equity recovered 18% (Nifty From 16th June to 19th Aug. Nifty – 15200  to 17900) and many traders missed the opportunity. So, any sharp decline will be good opportunity for the Indian market to buy on strong fundamental stocks.
Nifty – Nifty has made a Bearish Hanging Man candle on weekly frame and negated its higher lows formation of the last nine sessions. Now it has to hold above 17500 zones to again attract the positive momentum towards 17666 and 17777 zones whereas support is intact at 17442 and 17350 zones.
Zee Ltd has given a breakout of the cup and handle pattern on the daily scale and it has formed a strong bullish candle which indicates buying interest. On the weekly scale the stock has formed a strong bullish candle and has closed above the 20 week average with good volumes which indicates bullish momentum to continue. There is strong momentum across the media stocks which will support the prices to move higher. RSI oscillator is also positively placed on daily and weekly charts. Considering the current chart structure, we advise traders to buy the stock for up move towards 280 with a stop loss of 250.
Eicher Motors is making higher highs since the last 3 weeks which indicates strength in the counter. On the daily scale it is respecting the 20 DEMA since the last 44 sessions and inching upwards. The overall chart setup is strong which will take the prices to higher levels. RSI oscillator is also positively placed on daily and weekly charts. Considering the current chart structure, we advise traders to buy the stock for up move towards 3550 with a stop loss of 3290
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