Nifty could slip to 17,300 as Fed moves in focus: Analysts

Analysts expect the stock market to weaken further with the Nifty falling to 17,300 levels. The index closed at 17,531 on Friday as sentiment took a beating amid growth concerns in the US, expectations of aggressive rate increases by the US Federal Reserve in its policy meeting on September 20-21.

,

, SBI, BEL,

,

,

,

, and

are expected to continue their rally, analysts said.

SUDEEP SHAH

HEAD – TECHNICAL & DERIVATIVE, SBI SECURITIES

Where is the Nifty headed this week?

Indian markets witnessed profit booking at higher levels in the past few days and closed below the 20-day exponential moving average of 17,690, implying short-term weakness. Technically, Nifty has closed forming a bearish engulfing candlestick pattern on the weekly time frame with crucial support at 17,230-17,250 levels, and a breakdown below this zone could attract further selling pressure towards the 200-day moving average at 17,000 zones, while resistance on the upside is seen at 17,800-17,850 zones. Above 17,850, the index can revisit 18,090-18,200 levels on the upside. Based on option chain data, Nifty is expected to trade within a broad range of 17,250- 17,830.

What should investors do?


The most crucial event in the forthcoming week is the US Fed meeting outcome on September 21, ahead of which global markets are expected to witness heightened volatility. Hence, traders are advised to take hedged bets with appropriate position sizing, keeping leverage in check. We expect stocks from the banking, defence, auto, and chemicals space to outperform with a positive trade setup visible in select names such as ICICI Bank, Federal Bank, BEL, Navin Fluorine, Eicher Motors, and Maruti.

PRITESH MEHTA

SENIOR VICE PRESIDENT – RESEARCH, YES SECURITIES

Where is Nifty headed this week?


Last week’s sustenance above the 18,000 proved futile as Nifty failed to conjure positive follow-through moves. Divergence in our customised Nifty Top 10 index and Nifty suggests near-term pain. The presence of a tall red bar and declining breadth in Nifty and broader markets indicate an immediate hurdle near the 18,000 zones. Historically, it’s been observed that the high of such bearish candles tends to be troublesome. We expect the index to digest its multi-week upmove and retrace back to the 17,250-17,300 zone.

What should investors do?


Sectoral rotation will continue to be a dominant theme. The Nifty CPSE index is flirting around its April 2022 peak. On point & figure chart, it is trading above its 10-column average and witnessing follow-through post a bullish anchor column, implying strength. Meanwhile, the ratio of Nifty Auto and Nifty has retraced lower from the confluence of the hurdle zone, likely to bring a recent period of outperformance of autos to exhaustion, resulting in stock-specific correction.

,

could witness profit booking between 10% and 12%.

DHARMESH SHAH

HEAD-TECHNICALS,

Where is Nifty headed this week?

We expect the index to consolidate ahead of the US Fed event and form a higher base that would pave the way towards 18,300 by October. Meanwhile, strong support is at 17,300, which we do not expect to breach. Over the past four weeks, the index has undergone a slower pace of retracement by retracing merely 38.2% of the mid-JulyAugust rally, thereby making the market healthier. Brent crude prices continue to trend downward after breaking their two-year support trend line. A decisive break below 86 would lead to further declines. Nifty 500 ratio against S&P 500 has given a breakout from decade-long consolidation, underscoring relative outperformance ahead.

What should investors do?


Empirically, secondary corrections are an integral part of bull markets that pave the way for the next leg of up-move. Thus, an ongoing breather should not be construed as negative. Instead, dips should be capitalised to accumulate quality stocks. We like SBI, NTPC, Titan, Asian Paints, and

in the large-cap space for a 5-7% upside. Our preferred midcaps are TCI,

,

,

, and

for 8-10% upside.

(What’s moving Sensex and Nifty Track latest market news, stock tips and expert advice on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds.)

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