The GIFT Nifty was flat during Thursday’s early trading session, indicating a tepid opening for domestic indices NSE Nifty 50 and BSE Sensex. After trading in the red for most of Wednesday’s session, Nifty pared its losses to close 0.16% in the green at 19,465. From its intraday lows, Sensex gained over 500 points to settle at 65,539.42, clocking a gain of 0.12%.
“The initial apprehension stemming from an above-expected surge in domestic CPI inflation, driven by higher food prices, induced volatility in the Indian market. However, the market found some relief as the likelihood of this inflation surge being transitory alleviated concerns, leading to a recovery in the latter part of the trading session. Moreover, as core inflation continued to moderate, the market did not anticipate a rate hike, although the possibility of an extended rate pause seemed more probable. Stronger-than-anticipated retail sales data in the US and concerns about further rating downgrades of US banks contributed to choppiness in Western markets, while Asian markets reacted to the rate cut initiated by the Chinese central bank,” said Vinod Nair, Head of Research at Geojit Financial Services.
Asian Markets
Shares in the Asia-Pacific region were trading in the red on Thursday. China’s Shanghai Composite and Shenzhen Component were 0.75% and 2.18% lower respectively. Japan’s Nikkei 225 traded with deep losses of 1.39%. South Korea’s Kospi declined 1.39% while Hong Kong’s Hang Seng fell 2.16%. The Taiwan Weighted index recorded a loss of 0.82%.
Crude Oil
Oil prices fell in early trade on Thursday, extending losses to a fourth consecutive session on fears of slowing growth in China and possible further U.S. interest rate hikes weakening fuel demand in the world’s two biggest economies.
FII/DII Data
Foreign institutional investors (FII) bought shares worth net Rs 722.76 crore, while domestic institutional investors (DII) added shares worth net Rs 2,406.19 crore on 16 August, according to the provisional data available on the NSE.
F&O Ban
The National Stock Exchange has IIndia Cements, Hindustan Copper, GNFC, SAIL, Chambal Fertilisers, Delta Corp, Granules India, ZEEL, Indiabulls Housing Finance, Manappuram Finance, and Balrampur Chini Mills securities on its F&O ban list for 16 August. According to the NSE, stocks are prohibited in the F&O sector when they have exceeded 95% of the market-wide position limit (MWPL). During the F&O ban period, no new positions are permitted for F&O contracts in that stock.
Bank Nifty Outlook
“Bank Nifty has closed in the negative for the fifth consecutive trading session. It has reached the 20-week moving average and hence the fall may not be severe from current levels. The trend is still negative, however oversold, and we can observe divergence on the hourly charts which indicates that a pullback is possible over the next few trading sessions. The pullback can stretch higher till 44,400 – 44,500,” said Jatin Gedia – Technical Research Analyst at Sharekhan by BNP Paribas.
Technical View
“The negative chart pattern like lower tops and bottoms is intact. Having formed a new lower bottom at 19,257 on Monday, the odds of Nifty forming another lower top could be high in the short term. Currently, the strong cluster resistance is placed around 19,550-19,600 levels (down sloping trend line, daily 10/20 day EMA) and one may possibly expect weakness from the highs for this week. Immediate support is placed around 19,250-19,300 levels,” said Nagaraj Shetti, Technical Research Analyst, HDFC Securities.
FOMC Minutes
The minutes of the US Federal Reserve’s July monetary policy meeting revealed that the Fed officials retained the battle against inflation as their highest priority and were divided regarding the need for further interest rate hikes to combat inflation. This added uncertainty among investors for future rate hikes.