Dalal Street Corner: Market extends losses to 2nd day amid rising crude, FIIs sell-off; what should investors do on Thursday?

The domestic equity market extended losses for the second day in a row on Wednesday, weighed down by rising crude oil, Foreign institutional investors (FIIs) selling and expectations of slowing down of the economy.   

The Brent contract for July delivery expired on Tuesday at $122.84 a barrel, up 1%, while US West Texas Intermediate (WTI) crude rose 37 cents, or 0.3%, to $115.04 a barrel, said a Reuters report. 

On the other hand, foreign investors continued to exert pressure on the India market as they offloaded shares worth Rs 1,003.56 crore on Tuesday, May 31, showed stock exchange data. 

Besides, q4GDP data hinted that Indian economy may slow down going forward in FY23, acting as one of the headwinds pulling down the market on Wednesday.   

Meanwhile, the Nifty50 and Sensex ended lower by 0.37% and 0.33% as benchmarks ended near their previous closings. Headline indices ended the day at 16,522.75 and 55,381 as profit booking in IT, Pharma and Realty stocks dragged the market.  

Outperforming benchmarks, Nifty midcap closed flat with marginal gains and small cap ended higher by nearly 0.3% on Wednesday. Sectorally, PSU Bank witnessed some buying interest, while IT stocks came under huge selling pressure.  

"Markets traded volatile and ended marginally lower for the second consecutive session. After the initial uptick, the benchmark drifted gradually lower, however, recovery in the last half an hour of the trade trimmed losses," said Ajit Mishra, VP - Research, Religare Broking Ltd 

He said a mixed trend was witnessed on the sectoral front wherein banking, capital goods and metals ended higher whereas realty, IT and healthcare traded subdued. "Positivity on the broader front kept the participants occupied," said the expert. 

As the market continues to exhibit a great deal of volatility, here is what experts say about current trends in the market.  

Rupak De, Senior Technical Analyst at LKP Securities  

Nifty remained choppy for the day as the benchmark index ended without a directional move. On the higher end, 50EMA has been acting as a crucial resistance. However, the Nifty slipped not very far from the previous close. 

The trend remains sideward for the near term. Support is visible at 16400, whereas on the higher end, resistance is likely to remain intact at 16700. 

Anand James, chief market strategist at Geojit Financial Services.  

We are moving into a consolidation phase, investors might not be all that keen to push decisions or put money on the table ahead of India central bank`s monetary policy decision next week. 

Ajit Mishra, VP-Research, Religare Broking Ltd 

With macro data behind us, the performance of the global markets amid the lingering inflation fear would dictate the trend. Besides, monsoon updates ahead of the monetary policy meet would also be in focus. Amid all, we reiterate our bullish view and suggest continuing with the “buy on dips” approach. 

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

The Nifty witnessed consolidation above multiple support parameters on June 1. On the daily chart, the Nifty had crossed a falling trendline recently and the index is retesting it. The hourly chart shows that the junction of the 40 hour exponential moving average and  the hourly lower Bollinger Band is offering cushion on the downside. 

In terms of the levels, 16400 is now acting as a crucial support as per the principle of role reversal. The short term bullish stance remains intact as long as the Nifty holds on to 16400 on a closing basis. Short term target on the upside has been pegged at 17000.

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

A clear trend is unlikely to emerge in the market in the near-term. At lower levels DIIs and retail investors will buy, pushing the market up; at higher levels FPIs will sell, pushing the market down. 

The dominant factor determining the market trend, globally, will be inflation and how far central banks, particularly the Fed, will go in hiking rates to contain inflation. 

Investors can follow a cautious investment strategy. In this uncertain context, buying high quality stocks which will benefit from growth recovery. Leading financials, IT, cement, telecom and segments of autos appear sound investment bets." 

Vinod Nair, Head of Research at Geojit Financial Services. 

Continuous rise in crude oil prices due to EU’s decision to partially ban Russian oil hindered global market. Indian economy registered a growth of 8.7% in FY22, but is expected to slow down in FY23 to 7.2%, as per the latest RBI forecast. Auto sales data, posted by major manufacturers, witnessed growth in passenger and commercial vehicle segments due to pick up in the construction sector, however, two-wheeler and tractor segments continued to remain under pressure 

(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.)