Sensex, Nifty May Open In Red; Inflation, FOMC Minutes Q1 Results In Focus; 3 Stocks To Buy

Indian market is likely to open in red on Monday owing to lack of positive factors from global cues. Asian stocks are under pressure, while Gift Nifty traded on a bearish note, hinting downside in the opening bell for Sensex and Nifty 50. CPI Inflation data, FOMC minutes, global trends, and Q1 earnings among others will be key triggers for the market. Last week, on Friday, Sensex and Nifty 50 ended in the red with banking stocks dragging the performance.

Gift Nifty, formerly known as SGX Nifty, traded at 19,424, down by 55.5 points or 0.28% at 8.02 a.m. on Monday. The index's performance ranged between 19,466.5 to 19,423.0 levels after opening at 19,423.0.

Asian shares traded lower ahead of China data. MSCI's broadest index of Asia-Pacific stocks outside Japan eased by another 1%, after tumbling by 2% in the trading week from August 7-14, while Japan's Nikkei 225 was off by half a percent, despite exporters drawing support from the weak yen. Meanwhile, China's blue chips plunged over 1.1%, after down by 3.4% last week.

As per Reuters report, Asian shares struggled on Monday ahead of China data that is likely to amplify the case for serious stimulus even as Beijing seems deaf to the calls, while rising Treasury yields lifted the dollar to a 2023 peak on the embattled yen. Geopolitics was an added worry after a Russian warship on Sunday fired warning shots at a cargo ship in the southwestern Black Sea, heralding a new stage of the war that could impact on oil and food prices.

Last week, Sensex and Nifty 50 ended the trading week between August 7-11 with a drop of nearly a per cent as RBI's policy outcomes and key macroeconomic data dictated the sentiments. This would be the third consecutive bearish week for domestic equities. Global cues witnessed volatility on concerns over economic growth. Foreign institutional investors were broadly net sellers while domestic institutional investors were net buyers for most of it. Meanwhile, the rupee weakened against the US dollar and ended the week lower.

On Friday, Sensex ended at 65,322.65, down by 365.53 points or 0.56%, while Nifty finished at 19,428.30, lower by 114.80 points or 0.59%. The rupee ended at 82.8450 per dollar, depreciating by 0.16% alongside its Asian peers. Further, foreign institutional investors (FIIs) sold Rs 3,073.28 crore worth of Indian stocks on August 11, while domestic institutional investors (DIIs) were net buyers with an inflow of Rs 500.35 crore on the day.

In the trading week that ended on August 11, Sensex tumbled by 499.32 points or 0.76%, while Nifty 50 shed 123.30 points or 0.63%. The rupee closed the week with a 0.12% drop against the US dollar index. Last week, RBI kept repo rate unchanged to 6.50% for the third time in row, while India's industrial output fell to three-month low at 3.7% in June 2023.

Monday's Trade Guide:

Vaishali Parekh, Vice President - Technical Research, Prabhudas Lilladher expects Nifty Spot Index support to be around 19300/19250, while resistance to be in the range of 19550/19600. Meanwhile, Bank Nifty spot index support is likely around 43800/43750, and resistance at 44600/44650.

Parekh has recommended 'Buy' on three stocks for Thursday's trade. These are:

- Buy Clean Science at Rs 1422 with a stoploss of Rs 1402 for target price of Rs 1480.

- Buy Bombay Dyeing at Rs 122 with a stoploss of Rs 120 for a target price of Rs 130.

- Buy Schneider Electric at Rs 315 with a stop loss of Rs 310 for a target price of Rs 330.

Weekly Outlook:

Arvinder Singh Nanda, Senior Vice President, of Master Capital Services:

India's WPI and CPI inflation data, Exports and Imports numbers, Forex reserves will be in focus in the coming days. RBI projected inflation to be 5.4% in FY24. Major key global events that will drive the market next week are China's Industrial production, US retail sales, crude oil inventories, building permits, initial jobless claims, FOMC meeting, UK unemployment rates, CPI data, retail sales, Euro inflation and GDP data. We expect the Indian market will continue to remain rangebound and will take further cues from RBI decision, US job data and minutes of the FOMC meeting.

The NIFTY index has witnessed a correction for the third consecutive week following its all-time high at 19,991, forming an inside bar candle on the weekly time frame. NIFTY prices remained well above their short-term moving averages i.e. 21 and 55-day EMAs.

Contrastingly, the Banknifty appears weaker compared to the NIFTY. It concluded the week below its previous week's low. The Banknifty has briefly fallen the neckline support of the Head & Shoulders Pattern on the daily chart.

Santosh Meena, Head of Research, Swastika Investmart:

A critical aspect to monitor is the exchange rate between the rupee and the dollar. Recent indications of rupee weakness, with the potential to breach the 83 level against the dollar, necessitate close observation. Given the recent consistent selling by FIIs, their future actions will be closely tracked, as they hold the potential to dictate the overall trajectory of headline indices.

From a technical standpoint, the Nifty index is exhibiting signs of weakness, characterized by a lower top formation. The challenge lies in surpassing the 20-day moving average (20-DMA), positioned around the 19650 mark. On the downside, immediate support rests at 19300. A breach below this level could expose Nifty to further declines, possibly targeting the 19191 and 18888 levels. The re-establishment of bullish momentum hinges on a rebound above the 20-DMA.

Conversely, Bank Nifty is displaying underperformance and has experienced a breakdown below the crucial support level of 44444. This breach opens the door to a potential support zone ranging from 43500 to 43300. A bullish resurgence would necessitate a successful breach of the 50-day moving average (50-DMA) at 44700.

Furthermore, insights from the derivative market indicate a decline in FIIs' long exposure in index futures to 40%, signifying a short-term bearish bias. Additionally, the put-call ratio stands at 0.91, approaching oversold territory.

Ajit Mishra, SVP - Technical Research, Religare Broking:

The continued pressure in the banking pack is fading the recovery attempts however stability in select heavyweights is capping the pace of decline. Besides, resilience in the global markets is also helping in restricting the downside so far.

The recent price action indicates the corrective tone to continue in Nifty, after the failed attempt to surpass the hurdle at 19,650. And, a decisive break of the recent swing low i.e. 19,300 may push the index to 19,100. Besides, we are eyeing 43,850 in the banking index as the next key support, which could prompt some recovery. Meanwhile, traders should focus more on risk management citing mixed signals and staying stock-specific.

Disclaimer

The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns. in advises users to consult with certified experts before making any investment decision.