Markets tanked on the weekly expiry day and lost over 2%, tracking feeble global cues. Initially, the benchmark opened with an uptick, in reaction to the rate hike by the US Fed, which came in line with the expectation. However, it couldn’t sustain for long and gradually drifted lower as the day progressed.
The breakdown of March low i.e. 15,670 levels in Nifty on the weekly expiry day further added to the pressure. Consequently, the Nifty index settled around the day’s low to close at 15,360. All the sectoral indices traded in tandem and ended lower wherein the metal and media stocks were trashed badly. The broader indices too ended with the sharp cuts and lost in the range of 2.5-3.5%.
Markets are skeptical about how the global economies would attain growth amid the aggressive tightening. After the decisive breakdown below 15,650 in Nifty, the next major support zone exists around the 14,800-15,000 zone. We feel it’s prudent to stay light and align the positions accordingly until we see some decisive signal of reversal.
Prashanth Tapse, Vice President
(Research), Mehta Equities
After witnessing a temporary relief that saw markets rebound in the morning session, Nifty’s gains evaporated as the benchmark fell hard and, most importantly, ended at its lowest point of the day. Actually, the outlook for sizzling core inflation is still troubling the big Nifty bulls. The fact that the Fed has stepped up to raise rates faster, the street suspects that the RBI may catch up with the hawkish Fed.
After today’s sharp plunge, we suspect bulls will have to battle hard in the backdrop of a hawkish Fed and RBI, spiking oil prices, inflation concerns, growth fears and persistent FIIs selling. Technically speaking, the immediate support for Nifty is seen at 15000 mark. Below 15000, expect the Nifty to quickly slip towards 14251
Osho Krishan, Sr. Analyst - Technical & Derivative Research, Angel One:
The market is a bit in the oversold region, and the zone of 15000-15200 might provide a temporary stay to the bears. For now, the zone of 15600-15700 is considered a daunting task for the bulls.
Going forward, our market is likely to remain volatile in the near term and is expected to mirror the moves from the global peers. Looking at the recent fall, it is advised to avoid undue risk and stay light on positions. Also, one needs to keep a close tab on the geopolitical developments and avoid aggressive bets till the volatility looms over.
Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities:
Markets witnessed frenzied selling in the closing stages of the trading session, after a sharp slump in key European indices prompted investors to unwind their position further. Rising interest rates to curb inflation menace and falling crude oil prices is creating fear amongst investors that the world could be heading towards a major economic slowdown as demand falters.
Technically, the Nifty finally dismissed the key support of 15650 which it held since March. It was a decisive dismissal, that too on the day of the big event, thus inviting a pattern of further weakness in the medium term.
With the Nifty closing below 15400, the current bearish sentiment may see the index slide further to 15100 or 15000 in the near term.
On the other hand, the previous support of 15650-15730 levels has now become resistance to the market. The strategy should be to short trade if Nifty bounces to given levels and place a stop loss at 15800 or buy Nifty if it drops to 15100-15000 with a stop loss at 14950.
Vinod Nair, Head of Research at Geojit Financial Services:
Market is catching up to the reality that tight monetary policy is the lone card on the table lingering on high inflation. As a result, the global economy is bound to slow down further impacting corporate earnings, as indicated by MoM fall in US retail sales. Valuations continue to trade on the marginally upper side of long-term averages and FIIs continue the selling mode. The stocks trading at high valuations & sectors like IT & Metals are the most impacted firms. In such a situation, preservation of capital is the theme by investing in a balanced portfolio of equity, debt & cash.
In equities, safe sectors will be those that are least impacted by inflation & aggressive policy like Finance & Services. Defensives like Consumption, IT, Pharma & Telecom can also be considered on a long-term basis.
Deepak Jasani, Head of Retail Research, HDFC Securities:
Nifty fell sharply on June 16 extending its losing streak to 5 days after giving up morning gains. Nifty opened gap up but soon after making an intraday high thereafter, it fell continuously to close near the intraday lows. At close, Nifty was down 2.11% or 331.6 points at 15360.2.
Nifty has breached the crucial support of 15660-15700 and this level will now act as a resistance. On falls 15315 could give some support, failing which the Nifty could head towards 14340 levels over the next few days/weeks.
Rate hike fears have depressed expected valuations of stocks on the one hand, while making debt instruments attractive. Stubbornly high inflation is impacting sentiments while fears of recession (that could bring down inflation) could lead to earnings downgrades.
Vinod Nair, Head of Research at Geojit Financial Services:
The early gains led by an in-line Fed policy was dampened as recessionary fears haunted global sentiments. A cut in growth projection and hints of continuation of aggressive policy in the next meeting instilled chances of a recession in the US economy.
In this current scenario, safe sectors will be those that are least impacted by inflation & aggressive policy like Finance & Services. Defensives like Consumption, IT, Pharma & Telecom are worthwhile on a long-term basis.
S Ranganathan, Head of Research at LKP securities:
FED effect coupled with a delayed start to the southwest monsoon wreaked havoc as the Nifty caved in below 15400 for the first time in the last one year.
As the street prepares for further front-loaded action by central banks in a bid to anchor spiralling inflation, its impact on consumer spending kept investors on the backfoot.
A mere glance at the stocks hitting one-year lows today is reflective of the risk-off mood on the street as only a handful of FMCG stocks displayed a green tick among front liners.
Market Close
: Benchmark indices witnessed a sharp fall and ended at fresh 52-week low on June 16 amid selling across the sectors.At close, the Sensex was down 1,045.60 points or 1.99% at 51,495.79, and the Nifty was down 331.60 points or 2.11% at 15,360.60. About 607 shares have advanced, 2680 shares declined, and 97 shares are unchanged.
Hindalco Industries, Tata Steel, Coal India, Tata Motors and ONGC were among the top Nifty losers, while gainers were HUL, Nestle India and Britannia Industries.
All the sectoral indices ended in the red with metal index fell over 5 percent.
BSE midcap and smallcap indices shed over 2 percent.
Devarsh Vakil, Deputy Head, Retail Research, HDFC Securities
Tops and Bottoms are for fools and liars. We do not attempt to predict the exact levels. For investors who are not fully invested or who have raised cash in the recent past by booking profits, these times provide an opportunity to gradually raise equity portion of their portfolio. While shortlisting investable stocks one will have to be careful of not having exposure to sectors or stocks that have been derated due to very high valuations or very high profit forecasts that seem difficult to achieve.
Also stocks need to be examined closely for sustainability of earnings. Nobody can catch a bottom and hence it is necessary to begin this process and achieve an attractive entry point by averaging on the down