By Rahul Shah
Markets continued to slide lower, with the benchmark equities finishing lower for the second straight week on June 17 and also posting its biggest weekly loss since May 2020 as concerns over the global inflation leading to monetary policy tightening by central banks. High inflation, rising interest rates and growing concerns over corporate earnings and economic growth are major concerns in the global market. Sensex lost 2,943 points (5.40%) to close at 51,360.42, while the Nifty fell 908 points (5.6%) to end at 15,293. Sensex lost almost 8% or 4400 over the last ten trading sessions. There were widespread sales in the market.
Concern over rising oil prices, continued FII sales, delayed monsoon and mixed macro data dampened market sentiment. The Nifty Metal Index plunged 12% due to weak global demand and government-imposed import duties. Foreign investors have already sold shares worth around Rs 1.9 lakh crore so far in 2022, while this week has sold nearly Rs 24,000 crore or $3.5 billion. FIIs are also expected to maintain their selling frenzy, with the political tone of central banks pointing to continued rate hikes of greater magnitude.
China’s interest rate decision (Monday) would be an important trigger for the markets. On the home front, the COVID trend and advancing monsoon will also be a focus. The market tone continued to remain bearish as weak global signals weighed on investor sentiment. Investors are trading cautiously after the aggressive rate hike by the US Fed. Inflation has reached its highest level in 40 years in the United States, forcing the Federal Reserve to raise interest rates. The Fed raised its key rate by 75 basis points on Wednesday and officials announced an acceleration in the pace of rate hikes.
In Europe, the Swiss National Bank unexpectedly raised rates by 50 basis points on Thursday for the first time in 15 years, while the Bank of England raised its lending rate by 25 basis points to 1.25 % to its highest since 2009 and warned that more may be ahead. The domestic market will continue to trade with high short-term volatility, however, the ongoing corrections are disguised opportunities on medium to long-term investments. Also in India, retail sales inflation is at 7.09%, while the WPI has remained in double digits for 14 consecutive months. This has forced the RBI to raise interest rates by 90 basis points over the past 2 months, making investors nervous.
The market has been in a strong downtrend over the past 14-15 sessions. Minor consolidations or small upside bounces have resulted in strong weakness from now on. Therefore, any upside bounce from here could be a short-term upside selling opportunity. On the higher side, the 15,600 area should be crucial overhead resistance ahead and is unlikely to be broken to the upside in a hurry. After a small upside bounce, the Nifty could drop to the 15,000-14,800 levels in the near term. If Nifty reached 14,882 points, then it would be considered a bear market. However, a slide below 15,000 is also a key psychological level to watch.
SL: Rs 835, Target Price: Rs 750
Indusind Bank gave a major breakdown on the daily and weekly chart and closed below the same. It is continuously forming lower lows for the past five trading sessions and resistance is gradually moving lower. RSI also gave a breakdown on a daily and weekly scale. • Given the current chart structure, we advise traders to sell the stock for a decline towards 750 with a stop loss at 835
TVS Motors Company
SL: Rs 725, Target Price: Rs 800
TVS Motors held well above its 20-day moving average on the daily scale, indicating the uptrend is intact. It’s resilience despite weakness in the global and broader market indicating the overall strength of the meter. The Momentum RSI oscillator is also positively placed on the daily and weekly scale. • Given the current chart structure, we advise traders to buy the stock for a rise towards 800 with a stop loss of 725.
(Rahul Shah is Senior Vice President, Group Advisory Leader-PCG, Broking & Distribution, Motilal Oswal Financial Services. Opinions expressed are those of the author. Please consult your financial advisor before investing.)