Saturday, May 21, 2022

Post budget rally about to start? Sensex may follow 3-year trend: Analyst

Indian stock markets today declined in line with global cues after the US Federal Reserve indicated continued tightening of policy from March 2022. Global markets have been volatile amid the US Fed and rising geopolitical tensions. According to analysts, Indian markets are also facing the same pressure due to heavy selling by foreign institutional investors (FIIs).

“If we look at the Indian markets, there are a lot of positive triggers that can help our market outperform but we need some calmness in the global markets. Market is not going in budget with any enthusiasm so there is good possibility of rally post budget and if we look at the trend of last three years market turns right before budget then it would witness post budget rally Is. Partha Nyati, Founder, Tradingo said.

The S&P BSE Sensex fell 1.56% to 56,963, as trading resumed after the national holiday on Wednesday, while the Nifty index fell 1.54% to 17,012.95. Indices have suffered deep losses over the past week, wiping away all the gains this year.

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Nifty is trying to establish its footing near the strong support zone of 16850-16600 after a severe fall. The market was overbought as the PCR slipped below 0.7 points and the index fell below 45% with future long exposure to FIIs, so a bounceback is due. Technically, 16800 is a long-term trendline support and a trailing demand zone, while the 200-DMA is placed near the 16600 level, so we can expect a pullback rally from here. On the upside, the 17500-17600 area would be the first resistance zone while above 17800, we would believe that the market has reversed and is ready to move higher.

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Meanwhile, 10-year yields fell to 25-months today after the Fed chairman indicated it was ready to tighten monetary policy to rein in inflation. The Indian rupee also slipped to a one-month low against the US dollar amid broader consolidation in the greenback.

“A rise in US 10-year bond yields and the dollar index are seen as negative for emerging markets. Tensions between Russia and Ukraine have led to a rise in crude oil prices. With all these headwinds, the market Today January is facing monthly expiry date of FNO contracts, which has increased volatility,” said Shrikant Chauhan, Head of Equity Research (Retail), Kotak Securities Ltd.

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