After The Bell | Sensex below 50K ahead of FOMC outcome; what should investors do on Thursday?

Market Outlook

Indian market slipped in the red for the fourth consecutive day in a row on Wednesday ahead of the outcome of the US FOMC meeting. Benchmark indices recorded a cut of over 1 percent each pushing them below crucial support levels.

The S&P BSE Sensex closed below 50,000 while the Nifty50 broke below 14,800, and the 50-Days Moving Average placed at 14,730.

Let’s look at the final tally on D-Street – the S&P BSE Sensex fell 562 points to 49,801 while the Nifty50 closed 189 points lower at 14,721.

“Ahead of the FOMC meeting, the Bank Nifty fell for the third consecutive day to drag Indices down almost 1.5% today. Metals and PSU stocks succumbed to profit-taking today,” S Ranganathan, Head of Research at LKP Securities told Moneycontrol.

On the broader markets front – the S&P BSE Mid-cap index, as well as the S&P BSE Small-cap indices, witnessed a cut of over 2 percent each.

On the sectoral front – selling pressure was visible in oil & gas, public sector, power, realty, energy, utilities, and industrials.

Bank Nifty opened positive but cascaded down throughout the day and breached 34150 levels. A steep decline was seen in the rate-sensitive index and it concluded the day with losses of around 600 points.

“Indian market remained in negative territory as investors traded cautiously ahead of the US Fed meeting coupled with a resurgence in COVID cases. Adding to that, the rise in international crude prices is also dragging the Indian market,” Vinod Nair, Head of Research at Geojit Financial Services told Moneycontrol.

“Global markets also displayed a weak opening as it awaits the final decision of the FOMC meeting today, which will decide the trend of the market in the short-term. On a consensus basis, an accommodative policy is expected by FED, which will help the global market to stabilize,” he said.

Here is what experts are suggesting investors should do on March 18:

Chandan Taparia, Vice President | Analyst-Derivatives, Motilal Oswal Financial Services Limited

The Nifty formed a strong Bearish candle on a daily scale and continued its weakness for the fourth consecutive session.

Now, till it remains below the 14900 zone weakness could be seen towards 14600 and 14500 zones while on the upside hurdles shift lower to 14950 and 15050 zones.

On the options front, maximum Put OI is placed at 14500 followed by 14000 strikes while maximum Call OI is placed at 15000 followed by 16000 strikes.

Ashis Biswas, Head of Technical Research at CapitalVia Global Research Limited.

The market witnessed a retracement to the support level around the Nifty50 Index level of 14750. The market’s short-term technical conditions are favoring a sideways correction is in the process.

While holding above 14750 is the key to prevent further move down. Aggressive traders can use sustaining above 14750 as a buying opportunity.

However, below this level market is likely to gain downside momentum and open the gate for a movement until 14540. As such, a strict stop at 14640 is advisable.

The momentum is observed indicators like RSI, MACD to stay neutral along with the market breadth, further strengthening the view of a short-term sideways correction.

Abhishek Chinchalkar, CMT Charterholder and Head of Education, FYERS

Indian markets fell for a fourth session today, weighed by weakness across all the sectors. The broader markets also cracked notably, with the Midcap 100 and Smallcap 100 index each declining over 2%.

The Nifty50 formed a tall bearish candle today with negligible shadow and closed right near the critical 50-day moving average support.

Since October of last year, the 50-day MA has acted as a strong floor for Nifty, with every decline near this average being met with a strong recovery.

Hence, for the short-term, one needs to closely monitor how Nifty trades near the 50-day MA. Sustainability below the same would be a bearish development and could lead to short-term correction in the index towards 14360.

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

The Nifty opened on a positive note only to face a fresh round of selling near the 20 DMA. The index witnessed sustained selling throughout the day. As a result, the Nifty has broken its swing low of 14745 as well as the 40 DEMA.

Going ahead, the index can test its daily lower Bollinger Band on the downside, which is near 14600. The overall structure shows that the index is in a prolonged consolidation phase & will take a while to prepare for the next leg of the rally. The pressure is visible in the broader market as well

Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities

The market registered selling pressure for the fourth day in a row. The Benchmark Nifty/ Sensex shed over 250/840 points from the day’s highest level.

Today, the index failed to sustain above 14950/50500 and due to consistent selling pressure from Oil and Gas, pharma, and selective auto stocks, the index plunged sharply.

Currently, the index is trading below 14825/50100 support level which is broadly negative for the Nifty/Sensex. If the market succeeds to trade below the same then the correction wave is likely to continue to 14650-14600/ 49500-49320 levels.

On the flip side, 14825/50100 would be the immediate hurdle, above the same we can expect a sharp pull-back rally up to 14950-15000/ 50300-50600.

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