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Tech View: Nifty recovers marginally from US Fed outcome; what should investors do on Friday?

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The Nifty50 closed in the red for the second consecutive day on Thursday, tracking weak global markets. Markets across the globe came under pressure after the US Fed raised interest rates by 75 bps.

The Nifty50 recouped some losses as it staged a smart bounce back from its crucial support placed near 17,500-17,550 levels. It formed a small-bodied candle on the daily charts.

The Nifty50, which opened at 17,609, slipped to an intraday low of 17,532 before bouncing back. The index recovered towards the close and ended 88 points lower at 17,629.

“The Nifty remained volatile during the day as the market participants adjusted positions according to the FOMC outcome. On the daily chart, Nifty formed a small-bodied candle with wicks on both sides, suggesting indecisiveness,” Rupak De, Senior Technical Analyst at

, said.

“However, weakness may persist as long as it remains below 17,700. On the lower end, support is visible at 17,500,” he said. A bounce back from a crucial support level is a positive sign, but if the rupee continues to slide on Friday, further selling pressure cannot be ruled out.

The rupee plunged 90 paise to close at an all-time low of 80.86 (provisional) against the US dollar, PTI reported.

“The US Fed turned more hawkish than anticipated, increasing its rate forecast to 4.4% by the end of 2022. The indication is that 125 bps more rate hikes can be expected in the next 2 policy meetings scheduled this year,” Vinod Nair, Head of Research at , said.

“Following this, the US dollar index rose above 111, depreciating INR to beyond 80. The Indian market was able to sustain its resilience with limited cuts, but if the rupee continues its weakness, the domestic market would turn less attractive for foreign investors in the short-term, affecting performance,” he added.


What should traders do?
The index closed above 17,600 for the fourth consecutive day amid intraday volatility. If the index fails to hold on to Thursday’s support of 17,532, then the next support is placed at 17,500-17,430 levels, suggest experts.

The Nifty50 attempted to bounce twice during the day; however, it faced resistance near the key hourly moving averages and the 20-DMA on the upside.

“Going forward, 17,700-17,720 on the Nifty50 is acting as an immediate resistance zone. The tough battle between bulls and bears is a typical characteristic of a consolidation phase,” said Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by

.

“Within this consolidation, the index is expected to slide down to 17,430 and subsequently to 17,200 in the short term,” he added.

On the sectoral front, pressure in banking and financials weighed on the sentiment, while buying in auto and FMCG majors capped the damage on Thursday.

There is a lot of uncertainty in markets; hence, traders are advised to reduce their leverage positions, suggest experts.

“The recent index movement shows indecisiveness amid the global uncertainty and it may take some time to subside. Meanwhile, we recommend focusing more on overnight risk management and limiting leveraged positions,” Ajit Mishra, VP – Research,

Broking, said.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)



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