Indian equity markets look set to open in red

30 Sep 2022 , 08:42 AM

Indian markets are very likely to open in red today. RBI will announce interest rate hike later in the day. Many investors and market participants will therefore do some selling in early hours as they take a more cautious stand. A 50 basis point rate hike is expected. If RBI goes for anything above that it will be a severe jolt for equity markets. Even a 50 basis point hike will be depressing for equity markets, as it will slow down the economy further.

US markets flattered to deceive with 1 day rally seeing another sell off the next day.  The sell-off was led by Apple, which fell 6%.  Dow Jones fell 450 points. Nasdaq lost 300 points. Bond yields closed near 3.70%. US$ index fell another 1% to 111.5 as most central banks stepped in to defend their respective currencies.

 Asian markets have opened in the red led by the Japanese ‘Nikkei’. Nikkei is down by 300 points. Nikkei is seeing the worst week and month in over 1 year. IT sell off is seeing Taiwan and South Korean markets also trade in red as sentiments are at their worst in over 6 months. Chinese stocks are also reacting to reopening with valuation comfort yet negative sentiments weighing on prices. 

Nifty saw another volatile day yesterday with the index swinging over 240 points before closing lower by 40. Foreign Investors’ selling coupled with derivative contracts expiry added to the volatility. Bank Nifty closed, down by 112 points after seeing swings of over 750 points. Kotak, ICICI & HDFC Bank led the losers. Mid-caps, however, bucked the trend to close in the green. Nifty small cap 100 index closed higher by 0.63%.

Technical View: Nifty likely to find support at around 16600. 17200 is likely to act as resistance on the upside. Bank Nifty likely to find support at around 37200. 38700 is likely to act as resistance on the upside.

TRADING call (1-2 days) : BUY Indigo October future at 1830-1840.  Stop loss: 1798. Target : 1905.

Derivative call- time period:(1 month) : BUY HDFC AMC October future at 1860-1870. Stop loss: 1827.70. Target: 1905.