Dalal Street corner: Benchmarks end the week with nearly 2.5% cuts ahead of Fed meeting; what should investors do on Monday?

Ahead of Fed meeting and US inflation data, the Indian market continued its roller coaster ride, correcting as much as two and half per cent this week, including massive over one half per cent on single day on Friday. Benchmarks Nifty50 and Sensex closed with 2.3% and 2.6% cuts respectively for the week ended on June 10, 2022.  

Besides, barring June 9, the indices ended in the red on all four occasions between June 6-10. Apart from June 9, the market ended on the positive side only once this month on June 2 as indices ended the rest of the sessions in the red.  

Consumer Durable stocks were the biggest laggards this week with Nifty consumer Durable and BSE consumer Durable declining by around 3.5% each. Nifty Financial services, BSE Information Technology and BSE Metal ended the week with 3%, 2.8% and 2.7% cuts. 

Meanwhile, on Friday broader Nifty50 dropped nearly 1.7% to close just above 16,200, while the Sensex tanked over 1000 points (18%) to end near 54,300.  

On Friday, All Nifty sectoral indices closed on the lower side with oil & gas, IT, bank and metal taking the maximum drubbings.  

As the market continues to trade aimlessly amid volatility, here is what experts make of the Friday's session and what they recommend:  

Vinod Nair, Head of Research at Geojit Financial Services. 

Rising inflation fears gripped the domestic market leading to a heavy sell-off ahead of the release of US inflation data & Fed policy meet next week. The inflation data will be crucial to sense the quantum of a rate hike.  

The European Central Bank in its policy meeting signalled to start rate hike from next month and a large change in September. Persisted foreign fund outflow and widening trade deficit due to the elevated oil prices led to depreciation of INR, weakening the sentiment.  

Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas 

The Nifty, in the week gone by, failed to sustain above the short-term support parameters & ended near the low point of the week. On account of the global cues, Nifty witnessed additional selling pressure in the last session of the week. It opened with a significant gap on the downside & went on to break the 20 DMA.  

The index has filled up a gap area on the daily chart & has halted near a falling trendline. The overall structure shows that the range for the Nifty has shifted downward for the short term. 16000-16400 is expected to be the short-term range in the coming sessions. 

Ajit Mishra, VP - Research, Religare Broking Ltd 

After a minor pause in yesterday’s session, the market resumed its downturn and shed over one and a half percent. The markets will continue to take cues from the global markets in the absence of any major domestic event.  

First, participants will react to the US inflation data and upcoming macroeconomic data (IIP, CPI & WPI) will also be in focus. While the index is gradually inching lower, a mixed trend on the sectoral front is offering opportunities on both sides so traders should align their positions accordingly. 

V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services. 

The strengthening of the US 10-year bond yield to 3.05 % can be interpreted as the market discounting worse- than- expected inflation data in the US on Friday. If inflation data turns out to be worse-than-expected, equity markets will turn bearish. If it doesn't, markets will stage a rebound next week. Meanwhile, INR depreciation is becoming a tailwind for the IT industry. Since banks have hiked lending rates immediately after the repo rate hike, they are likely to post good results in the coming quarters. Calibrated buying on dips in high quality banking and IT stocks can fetch good returns to investors in the medium- term.

(Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)