By Rahul Shah
Equity benchmark Sensex nosedived nearly 1000 pts to close 2-week low at below 59000 mark amid rising volatility in global markets ahead of the Fed’s interest rate decision next week and expectation of US Fed to aggressively hike interest rate next week. Markets were mainly dragged by a sharp fall in technology and automobile stocks following a broader global selloff over recession worries. Investors lost over Rs6lakh during the week. However, banking stocks relatively outperformer compare to the other sectors and gained 1% against the previous week close. Bank Nifty touched record high at 41840. On a weekly basis, the Sensex shed 952 points or 1.60 per cent to close at 58841, while the Nifty nosedived 302 points or 1.70 per cent to close at 17531.
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As macroeconomic and policy uncertainty remains elevated, further market volatility is expected. US data pointed to robust numbers like retail sales and a strong labor market which is raising expectations of more aggressive action by the Fed as it tries to cool inflation. US 2-Year bond spiked to 15-year high at 3.87% while 10-year bond is hovering at 3.44%, implying a short-term pain to continue in the global markets. Moreover, US Dollar Index surged to multi years high, resulting in sharp decline across the commodity prices (Gold fell to 2-year low, aluminum, copper, oil to 2-7 month low). Apart from the US rate decision, Bank of England policy decision on 22nd (Thursday) and domestic Logistic policy will be announced today.
Back home, Indian markets is better placed compare to the other global markets due to strong micro factors like better-than-expected PMI data, stable inflation, 7% above normal monsoon, strong government policy implementation and oil price falling to 7-month. Expectation of strong quarterly results after Advance tax in the July-September quarter jumped by 22.6% (YoY) to Rs1.81lakh cr. However, India Vix spiked to 1-month high at nearly 20 which is indicating higher volatility due to global market volatility.
Nifty – Nifty has formed a Bearish candle on daily and weekly scale. The index wiped off its gains of the entire week and formed a Bearish Engulfing sort of candle on weekly frame. Now, till it holds below 17777 zones, weakness could be seen towards 17442 and 17250 zones whereas hurdles are placed at 17777 and 17850 zones.
Kotak BankCMP: Rs 1930| SL: Rs 1885| Target price: Rs 2070
Kotak Bank has formed a strong base and it has given a breakout of the rounding formation with a bullish candle on the daily scale. On the weekly scale, it has surpassed the falling supply trend line and has been sustaining above the same. It is also forming higher highs since last 3 weeks which indicates that the trend is positive. RSI oscillator is also positively placed on daily and weekly charts. Considering the current chart structure, we advise traders to buy the stock on for up move towards Rs 2070 with a stop loss of Rs 1885.
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Tata PowerCMP: Rs 236| SL: Rs 229| Target: Rs 250
Tata Power has retested breakout on daily chart and turned higher. It has negated lower highs formation after six trading session and formed a Bullish candle indicating strength in the counter. 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 Rs 250 with a stop loss of Rs 229.
(Rahul Shah is the Senior Vice President, Group Advisory Leader-PCG, Broking & Distribution, Motilal Oswal Financial Services. The views expressed are the author’s own. Please consult your financial advisor before investing)