Trade Setup For Tuesday: RBI Policy, Dollar, Oil Prices Key Factors To Know Before Opening Bell

The Indian market is expected to open between flat to bearish on Tuesday tracking feeble global cues. In the early trade, Gift Nifty performed lower, while Asian stocks were down as well after Wall Street ended mixed overnight. Crude oil prices pulled back as the US dollar strengthened on the back of upbeat data. In the previous session, Sensex and Nifty 50 ended positively driven by broad-based buying. This week, markets will await RBI's monetary policy outcomes, along with a host of economic data.

Last week, on Friday, markets performed positively with Sensex ending at 65,828.41, up by 320.09 points or 0.49%. Nifty 50 gained by 114.75 points or 0.59% to close at 19,638.30. It was this day's performance that minimised the impact of bears for the week.

Sensex ended the trading week from September 25th to 29th by declining 214.32 points or 0.32%, while Nifty 50 slipped marginally by 16.60 points or 0.08%. Nevertheless, it would be the second consecutive weekly drop for Indian benchmarks.

On the performance, Arvinder Singh Nanda, Senior Vice President, of Master Capital Services Ltd said, "Nifty and Sensex recovered to close higher on Friday, as advances led by the pharma, metal and media sectors. On a weekly basis, Benchmark Indices declined for the second week in a row. Nifty Realty and pharma rose the most whereas IT and Media declined the most this week."

Gift Nifty:

Gift Nifty, formerly known as SGX Nifty, traded at 19,569.5, down by 44 points or 0.22% in early trade of Tuesday. The benchmark traded in the range of 19,609.5 and 19,568.5 after opening at 19,613.5.

Key Things to Watch:

According to Nanda, US 10-year Bond Yield rose above 4.5% for the first time since 2007, as investors and traders taking cues from Hawkish Federal Reserve policy, with large fiscal deficits, decline in jobless claims and persistent inflation are the key factors to watch.

He further said, the US dollar Index is trading at a 10-month high and remains on track for weekly gains. The dollar has jumped on expectations that the U.S. economy will remain more resilient to higher interest rates after the Federal Reserve last week guided that it may hike rates further and is likely to hold them higher for longer. Also, Crude Oil crossed $95 after official data showed that US crude stocks fell more than expected, adding to worries about supply tightness amid production cuts by OPEC.

The market will take cues from some major domestic and global macroeconomic data such as S&P Global Manufacturing PMI and Services PMI data of different countries, API Weekly Crude Oil Stock, OPEC Meeting, US Factory orders, crude oil inventories, US Initial Jobless claims, India Interest rate decision, RBI Monetary and Credit Information Review, India Forex Reserves, US Non-Farm Payroll, US unemployment rate, auto sales number will be in focus.

Also, Pravesh Gour, Senior Technical Analyst, Swastika Investmart said, "It will closely monitor the Reserve Bank Governor-headed six-member monetary policy committee (MPC) meeting, which is scheduled for October 4-6, 2023. Reports suggest that the RBI is likely to maintain its pause on interest rate hikes at this meeting. Aside from that, market participants will be keeping an eye on the movement of the rupee against the dollar and crude oil prices. Investments by foreign institutional investors (FIIs) and domestic institutional investors (DIIs) will also be monitored.

Day Trading Guide For Tuesday:

Vaishali Parekh, Vice President - Technical Research, Prabhudas Lilladher expects a support level in the range of 19,500/19,450 for Nifty 50 on Tuesday, however, resistance is factored around 19,750/19,800. While she sees Bank Nifty as having a support level of 44,300/45,050 with resistance around 44,700/44,750.

To investors, Ajit Mishra, SVP - Technical Research, Religare Broking said, "Though the pace of decline has softened, the tone is still negative and we don't see that change until Nifty decisively reclaims 19750. Meanwhile, a mixed trend on the sectoral front is offering opportunities on both sides so traders should continue with a stock-specific trading approach."

Intraday Stocks Picks:

Parekh recommended buying in three stocks during Tuesday's trade. These are:

1. Tata Motors: Buy at Rs 630 with a stop loss of Rs 620 for a target price of Rs 655.

2. Bharat Electronics: Buy at Rs 138.20 with a stop loss of Rs 136 for a target price of Rs 148.

3. GAIL India: Buy at Rs 124.40 with a stop loss of Rs 122 for a target price of Rs 324.

Nifty Spot Index Support Level:

For Tuesday, Rupak De, Senior Technical analyst at LKP Securities said, Nifty ended the month of September with gains, following a weak August closing. The recent selling pressure was halted around the 50EMA. However, we need to close above 19,750 to witness a decent rally over the short term. A close or sustained move above 19,750 might take Nifty on a ride towards 20,500-20,700. On the flip side, a fall below 19,470 might trigger the resumption of the downtrend.

For the week, Nanda said, "One key level to watch is 19500, which represents a significant demand zone. This level is likely to attract more buyers who see it as an opportunity to enter the market for upside potential to 20000 marks. Below 19500 it is likely to be a bearish sign for the targets of 19000-18800."

Also, for this week, Gour said, Nifty is witnessing a correction where 19500 is an immediate demand zone. The potential target on the downside is the 19300-19250 zone. On the upside, 19800 is an immediate and critical hurdle; above this, we can expect bulls to get a grip for a move towards the 20000-20200 zone.

Bank Nifty Index Support Level:

For Tuesday, Kunal Shah, Senior Technical and derivative analyst at LKP Securities said the Bank Nifty saw a resurgence in bullish momentum as the bulls successfully defended the key support level at 44,200. However, challenges persist as the 20-day moving average (20DMA) at 45,000 continues to act as a strong resistance. The index appears to be consolidating within a range, with levels of 44,200 on the downside and 45,000 on the upside defining this range. A decisive break on either side of this range will likely trigger fresh trending moves. In particular, the support at 44,200 is crucial and could determine the index's near-term direction.

Here, Nanda giving a weekly outlook said, that Bank Nifty also Formed a doji star pattern on the weekly chart a bullish confirmation will be considered above 45000. It appears to have established a robust demand zone within the 44000-44200 range, making it an opportune area to initiate buying positions price drop to that level. Looking ahead, it's important to note that there is a resistance level expected at 45000-45200, which could pose a challenge for further upward movement in the index.

Meanwhile, Gour's weekly outlook is that Banknifty is fighting with the 100-DMA around 44500. If it sustains below this, 44000-43500 is a potential downside. 45000 is acting as a key barrier; above this, we can expect a short-coverage move towards the 46000 level.

Disclaimer:

The recommendations made above are by market analysts and are not advised by either the author or 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.