The stock market is likely to begin the week on a negative note amid weak global cues. At 16,900-level, SGX Nifty indicates a gap down opening of nearly 190 points on Monday.
The US equities closed the April session on a negative note overnight on Friday. Wall Street faced pressure as headwinds remained including expectations of an aggressive Fed tightening cycle, lockdowns in China, persisting inflation concerns, rising interest rates, and the recent jump in the US dollar. Asian markets were trading lower in the morning on Monday..
According to Santosh Meena, Head of Research, Swastika Investmart Ltd, the market is likely to kick off this week on a sombre note with the focus now shifting to the outcome of the US FOMC meeting which is crucial amid record inflation and growth worries.
According to Meena, this week is going to be a truncated one as the market will remain shut tomorrow on account of Id-Ul-Fitr (Ramzan Eid).
“Apart from the FOMC meeting, there will be a release of BOE interest decisions, US Payroll numbers, and Worldwide PMI numbers. The movement in commodity prices, dollar index, and FIIs' behaviour will remain other key factors,” said Meena.
On the domestic front, market is expected to react to monthly auto sales numbers. Q4 earnings continue to remain an important factor.
Separately, the Finance Ministry on Sunday reported an all-time high monthly earning from Goods & Services Tax (GST) at ₹1.68-lakh crore in April. It was ₹1.42-lakh crore in March.
Deepak Jasani, Head of Retail Research, HDFC Securities said, “The US Fed is set to release its policy statement on Wednesday, followed by a press conference from Chair Jerome Powell. The market is pricing in a 50 basis point rate hike on Wednesday, but recent Fed speakers have signalled increasing aggressiveness in the fight against inflation. In India, subdued Q4 corporate results are adding to concerns of investors who are already rattled by factors such as inflation, hawkish central banks, resurgence of Covid-19 cases in China and rising commodity prices. Nifty keeps getting sold on rises.”
Technical outlook
According to Meena, “Technically, the Nifty is stuck in the range of 16850-17450 and any decisive move from this band will dictate the further direction of the market. If the Nifty slips below the 16850 level then there will be a risk of any major correction where 16600/16400 are the next important support levels. On the upside, 17300 is an immediate resistance, while if Nifty manages to cross the 17450 level then 17600 will be the next hurdle. Bank Nifty has a critical support zone of 35500-35000 and if it slips below this zone then there will be a risk of a move towards the 34000 level. On the upside, 36700-37000 is a critical supply zone; above this, we can expect a short-covering rally,” said Meena.
As per Jasani, “An upward breach of 17300 triggers sales activity from FPIs. Poor advance decline ratio also reflects the tiredness of the local investors in maintaining a positive stance in the face of repeated selloffs. 16888-17378 seems to be the band for the Nifty over the next few sessions.”
FII net sellers
The Foreign institutional investors (FIIs) turned net sellers again on Friday, April 29, net selling shares worth ₹3648.3 crore, while domestic institutional investors (DIIs) net purchased shares worth ₹3490.3 crore, according to NSE provisional data.