Domestic markets are expected to open on a flat note despite positive global cues. With the broader market faltering, investors have turned cautious, said analysts. Of late, the number of stocks declining have outnumbered the gainers, as FPIs selling has hit almost $10 billion in October so far. On Tuesday, nearly 85 per cent of the stocks traded on the BSE ended in the red.
Gift Nifty futures at 24,550 signals a flat opening.
Rising US bond yields amid expectations of a modest rate cut by the US Fed led to weakness in global markets and outflow of funds from emerging markets like India. Following its peers, Indian equities too witnessed a decline, said Siddhartha Khemka, Head – Research, Wealth Management, Motilal Oswal Financial Services Ltd. Q2 earnings also show signs of moderation, has which dented sentiment, he said, adding that ”Overall we expect pressure to continue in the market driven by result oriented action.”
However, investors can follow a buy-on-dip strategy to accumulate quality stocks, he advised.
Technically, the market has weaken further said analyst.
Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates Ltd. (a Pantomath Group Company), said: On the daily chart, Nifty formed a bearish candle and broke the critical neckline of the head and shoulder pattern, confirming further weakness. The index is currently placed near 100-Days Exponential Moving Average (100-DEMA) support, which is placed near 24485. If Nifty sustains below 24,440, then the index could drift toward the 24,200-24,000 levels. On the upside, the previous support level of 24,700 will now act as an immediate resistance for the index.
The volatility index, INDIA VIX, rose 4.21% to 14.34, indicating an increase in market volatility.
This makes it important for traders to remain cautious. Open Interest (OI) data shows the highest OI on the call side at the 24,600 and 24,700 strike prices, signalling strong resistance levels. On the put side, OI is concentrated at the 24,400 and 24,300 strike prices, highlighting these as key support levels, said Hardik Matalia, Derivative Analyst, Choice Broking
Jatin Gedia – Technical Research Analyst at Sharekhan by BNP Paribas, said: On the daily charts Nifty has slipped decisively below the 20-week average (24718) which is a sign of weakness. “Daily and hourly momentum indicators possess a negative crossover, which is a sell signal. Thus, both price and momentum indicator suggest towards weakness. On the downside, we expect the Nifty to drift towards 24000, where there is a high concentration of open interest on the put side implying support. On the upside, 24900 – 25000 shall act as a crucial resistance from short term perspective,” he added.
Meanwhile, global stocks are trading flat in early deals on Wednesday.
