Dalal Street Corner: Global risk aversion, weak rupee force market to end with cuts ahead of earnings season; what should investors do on Wednesday?

The Indian market snapped a short one-day rally after trading firm in the first half of the session on Tuesday. Benchmark Nifty50 retreated after crossing the 16000-mark in the second half of the session to settle with marginal cuts amid global uncertainty and ahead of earnings season.  

The fear of inflation and central banks' attempts to tame it by hiking interest rates also weighed on the market as the barometer index Sensex declined by 100 points in the closing trade.  

Among other factors that led to the weakness were Dollar index surging to its two-decade high and the rupee falling to a record low against the dollar.  

The volatility also forced investors to book profit in midcap and small cap stocks. In the broader market, Nifty midcap and smallcap ended lower by 0.27% and 0.7% respectively.  

Among sectoral indices, Nifty Metal, Healthcare, Pharma and Oil & Gas saw some buying interest while all other indices sat in the red.  

Though the market ended negative amid volatility, the breadth remained positive with as many as 1714 stocks advancing against 1569 declining on the BSE Sensex.  

Meanwhile, Foreign Institutional Investors (FIIs) remained net sellers on Monday as they offloaded shares worth Rs 2,149.56 crore in the market on July 4, showed data with the exchanges. 

As the market Nifty swung volatile in a broader range amid a roller-coaster ride for markets, here is what experts make of Tuesday's session:  

Vinod Nair, Head of Research at Geojit Financial Services.  

The domestic market started strong by extending yesterday’s gains supported by strong macro numbers but global bourses opened weak, impacting the Indian market and forcing it to close with marginal losses. The current trend in the global market indicates that the uncertainties around recession and tightening monetary policy continue to haunt investors’ confidence. The dollar index opened sharply high affecting the performance of emerging currencies, depreciating INR 

Ajit Mishra, VP - Research, Religare Broking Ltd 

The sharp decline in the index can be attributed to the uncertain global markets and caution ahead of the earnings season. On the index front, the Nifty should hold decisively above 15,900 to inch towards 16,200, while a decline below 15,600 would again put the bears back in the game. Having said that, we maintain our bullish view on auto, FMCG, select pharma and realty counters and suggest utilizing dips to look for buying opportunities in these spaces.  

Rupak De, Senior Technical Analyst at LKP Securities.  

Indian equities witnessed volatility as the Nifty failed to absorb selling pressure from the call writers leading to a close around the day's low. Despite the selling, the Nifty held above the near-term moving averages. The trend is likely to remain positive as long as it sustains above 15800. On the higher end the resistance is visible at 16000/16200. 

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

Continuing with the positive momentum from the last session, the Nifty opened with gap up and scaled higher in the first half of the session on July 05. It went on to test the 16000-mark, which is a key barrier from short term perspective. The psychological mark attracted fresh round of selling resulting in swift decline that dragged the index in red. The hourly chart shows that the index couldn’t sustain above a falling trendline, which indicates exhaustion of the short-term positive momentum. Immediate support zone for the index is near 15750-15800. Overall structure shows that the Nifty is still in short term consolidation mode where the range is 15500-16000. 

Abhishek Chinchalkar, Head of Education, FYERS 

After starting the session on an upbeat note, the Nifty faced a stiff hurdle at the psychological 16000 level. Unable to sustain beyond this, the index gave up its entire intraday gains and slid to its session low. Triggering the weakness was a sudden bout of global risk aversion, with the European markets sliding post the open, the Dollar index swiftly surging by a percent to its two-decade high, and the rupee falling to a record low against the dollar.  On an immediate basis, support for the index is seen at 15800 followed by 15660, while resistance is at 16000 followed by 16170. 

(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.)