Dear Trader –
Benchmark domestic
indices faced sharp corrections and ended Thursday’s trading session in
negative territory. The NSE Nifty Future tumbled 203.00 points, or 1.02%, to
19,769.05,while the BSE Sensex plunged over 570.60 points, or 0.85%, to
66,230.24. The border indices as well as the sectoral indices ended in red.PSU
Bank, Auto, Private Bank, and Realty stocks saw the highest corrections.
Last night, the US Federal Reserve didn’t opt for
an interest rate hike but projected one more 25-basis-point rate hike this year
and 50 bps of rate cuts in 2024, versus 100 bps of 2024 cuts in June
projections.
The market breadth was skewed in the favour of
the bears. About 2,436 stocks declined, 1,230 gained, and 127 remained
unchanged on the BSE.
Here are top 5 factors keeping bulls under check:–
1) Fed fear – Fed’s signal to
markets that higher interest rates are the new normal may have bearish
implications.US Fed’s decision to defer rate hike, although expected, may keep
global markets on tenterhooks. Inflation in the US is still high and other
economic parameters are still showing little signs of slowing down.US 10-year
at 4.472% and 2-year at 5.184% does reflect the expectation that before
year-end further rate hikes may be expected.
2) Bond yields – The yield on
two-year US Treasury notes rose to a 17-year high of 5.1970%, while the 10-year
yield jumped to 4.4310%, a new 16-year peak. Rising bond yields are negative
for equity prices. Nasdaq ended 1.5% lower and other Asian markets like those
of Japan and China also ended over 1% lower.
3) Dollar index – The dollar index,
which measures the American currency against a basket of rivals, rose as high
as 105.59 on Thursday, its strong.
4) Crude reality – Adding to the inflationary
noise is rising crude oil prices. Analysts are projecting that oil rates could
touch $100 a barrel mark soon. A stronger dollar typically makes commodities
such as oil more expensive for buyers using other currencies. Rising US
bond yields, stronger USD and elevated energy prices – all are ingredients for
a bad recipe for Asian stocks.
5) FII selloff – After splurging
money on Indian stocks for six consecutive months, FIIs have been on a selling
spree in September. NSDL data shows that FIIs have been.net sellers to the tune
of Rs 5,213 crore so far in the month.
Nifty futures opened at 19895.00 points against the previous close
of 19972.05 and opened at a low of 19745.00 points. Nifty Future closed with an
average movement of 150 points and a decline of around 203 points and 19769.05 points…!!
On the NSE, the midcap 100 index will decline 0.89% and small cap100
index is decline 1.34%.
At the start of intra-day trading October gold opened at Rs.59315 fell
from a high of Rs.59315 points to a low of Rs.58731 with a decline of 662 points,
a trend of around Rs.58743 and October Silver opened at Rs.72970, fell from a
high of Rs.72970 points to a low of Rs.71680 with a decline of 1525 points, a
trend of around Rs.71705.
Meanwhile,
I believe that high-interest rates are not good for
the markets. Both the yields and markets cannot stay at an elevated level for
too long. Either one will break down. Given that Fed is resolute in its stand
it could be the markets which break down first.
Technically,
the important key resistances are placed in August Nifty future are at 19769 levels,
which could offer for the market on the higher side. Sustainability above this
zone would signal opens the door for a directional up move with immediate
resistances seen at 19808 – 19880 levels. Immediate support is placed at 19676 –
19606 levels.
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