Tech View: Nifty recovers marginally from US Fed outcome; what should investors do on Friday?

The Nifty50 ended Thursday for the second straight day lower, trailing weak global markets. Markets around the world came under pressure after the US Federal Reserve hiked interest rates by 75 basis points.

The Nifty50 recouped some losses as it intelligently bounced off its crucial support placed near the 17,500-17,550 level. It formed a small body candle on the daily charts.

The Nifty50, which opened at 17,609, slipped to an intraday low of 17,532 before bouncing back. The index recovered towards the end, closing 88 points lower at 17,629.

“The Nifty remained volatile throughout the day as market participants adjusted their positions in line with the FOMC result. On the daily chart, Nifty formed a small body candle with wicks on both sides, indicating indecisiveness,” Rupak De, Senior Technical Analyst at

said.

“However, weakness may persist as long as it stays below 17,700. On the downside, support is visible at 17,500,” he said. A rebound from a key support level is a positive sign, but if the rupee slides further on Friday, further selling pressure cannot be ruled out.

The rupee plummeted 90 paise to close at an all-time low of 80.86 (prelim) against the US dollar, PTI reported.

“The US Federal Reserve turned more hawkish than expected, raising its rate forecast to 4.4% by the end of 2022. It suggests that the next two policy meetings this year will see 125 basis points more hikes,” Vinod Nair, Head of research at said.

“After that, the US Dollar Index surged above 111 and depreciated the INR above 80. The Indian market has been able to maintain resilience with limited cuts, but if the rupee continues its weakness, the domestic market would become less attractive to foreign investors and the near-term impact on performance,” he added.


What should traders do?
The index closed above 17,600 for the fourth straight day on intraday volatility. If the index fails to hold Thursday’s support at 17,532, next support will be placed at 17,500-17,430, experts suggest.

The Nifty50 attempted to jump twice during the day; however, it faced resistance near the key hourly moving averages and the 20-DMA on the upside.

“Going forward, 17,700-17,720 on the Nifty50 acts as the immediate resistance zone. The uphill battle between bulls and bears is a typical feature of a consolidation phase,” said Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by

.

“As part of this consolidation, the index is expected to drop to 17,430 in the short term and then 17,200,” he added.

Sectorally, pressures in the banking and financial sectors weighed on sentiment, while buying in auto and FMCG majors limited damage on Thursday.

There is great uncertainty in the markets; Therefore, traders are advised to reduce their leverage positions, experts suggest.

“The recent index move shows indecisiveness amid global uncertainty and may take some time to subside. In the meantime, we recommend focusing more on overnight risk management and limiting leveraged positions,” Ajit Mishra, VP – Research,

broker said.

(Disclaimer: Experts’ recommendations, suggestions, views and opinions are their own. These do not represent the views of Economic Times)

https://economictimes.indiatimes.com/markets/stocks/news/nifty-recovers-marginally-from-us-fed-outcome-what-should-investors-do-on-friday/articleshow/94377996.cms Tech View: Nifty recovers marginally from US Fed outcome; what should investors do on Friday?

Russell Falcon

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