After The Bell: Sensex, Nifty lose over 1% each, what should investors do on Friday?

Market Outlook

The Indian market tanked for the fifth day running on January 28, pushing both the Sensex and the Nifty below crucial support levels.

The S&P BSE Sensex fell by more than 500 points, while the Nifty50 also saw a downtick for more than 100 points on the F&O expiry day.

The market has turned cautious ahead of the budget and weak global cues also dampened the sentiment. The Nifty50 has lost about 1,000 points in a matter of days.

The strategy is to stay neutral, and hedge positions ahead of the budget as wild gyrations cannot be ruled out, experts say.

“Market turned cautious after the unidirectional upside of the last 10 months due to ambiguity ahead the budget and profit booking in the global market due to over-enthusiasm,” Vinod Nair, Head of Research at Geojit Financial Services told Moneycontrol.

“Global risk parameters increased despite the US Fed maintaining its supportive policy, due to high speculation in the equity market and likely drop in fiscal & monetary liquidity, in the future.”

Here is what experts say investors should do on January 29:

Rohit Singre, Senior Technical Analyst at LKP Securities

The Nifty50 closed a negative note for the fifth consecutive session at 13,825, with a loss of a percent and formed a Doji candle on the daily chart, which suggests some reversal may be expected in the coming sessions.

The index has formed a good base near the 13,800-13,700 zone, if it manages to hold the level, we may see a swift pullback towards 13,900-14,000 zone, which is an immediate hurdle on higher side.

Ajit Mishra, VP – Research, Religare Broking Ltd

Markets may take a breather on January 29 after the recent slide but volatility would remain high. The Nifty respected the support zone at 13,700 but sustainability above the same is critical for a decisive rebound.

Considering the prevailing scenario and the budget, we suggest continuing with hedged positions and preferring index majors over others.

Gaurav Ratnaparkhi, Senior Technical Analyst, Sharekhan by BNP Paribas.

The Nifty closed in the red for the fifth consecutive session. It opened gap down and breached the 40-day exponential moving average. The key short-term moving average acted as a barrier for the day. On the downside, the index tested the 61.8 percent retracement of the Dec-Jan rise of  13,750, which offered some cushion.

The day’s low of 13,713 thus becomes the near-term support. A fresh short position can be initiated once the low breaks. The subsequent target on the downside is at 13,500.

On the higher side, a gap area of 13,898-13,929 will act as a resistance in case of any minor degree bounce.

Deepak Jasani, Head of Retail Research, HDFC Securities

Indian benchmark equity indices again ended lower on January 28. The Nifty opened gap down following overnight sharp weakness in the US markets and made a bottom at about 1305 hours. A feeble recovery followed. At close, the Nifty was down 150 points, or 1.07 percent, at 13,817.50.

Though it slipped, the index didn’t close at the intra-day lows. Pre-budget buildup on a small scale may begin from Friday; 13,713-13,927 could be the band of support and resistance for the near term.

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