Dalal Street Corner: Market gives up key support level ahead of US inflation data; what should investors do on Thursday?

The Indian market declined for the third consecutive day after opening on positive note as volatility in global markets weighed on the domestic benchmark indices. Stocks slipped on Wednesday and the euro lurked just above parity against the dollar, as traders waited to see if U.S. inflation data later bolsters the case for another supersized Federal Reserve rate hike this month. 

The weakness was also caused by huge profit -booking in energy, banking and financial stocks. Nifty Oil & Gas declined 1.3%, private bank dropped 1.05% and Financial Services fell by almost one per cent, tracking volatility in the global markets. Meanwhile, Pharma, FMCG and Healthcare played a crucial role in avoiding another big slump.  

Meanwhile, Nifty Midcap and Smallcap witnessed some buying interest as the indices ended with marginal gains of 0.16% and 0.22% respectively on Wednesday.  

Earlier, the broader Nifty50 declined 0.57% to slip below 16000-mark to 15,966.65, while the Sensex dropped by 372.46 points or 0.69% to 53,514.15.  

Foreign Institutional Investors (FIIs), who have been seen curtailing their selling spree for the past few sessions, once again increased the intensity by offloading worth Rs 1,565.68 crore in the Indian market on July 12.  

The market breadth turned flattish on Wednesday as 1673 stocks advanced and 1647 declined on the BSE.  

As the market gives up crucial support and gives up 16,000 level, here is what experts make of Wednesday's trading session. 

Vinod Nair, Head of Research at Geojit Financial Services. 

Strong domestic macro numbers and a fall in crude prices lifted Indian indices to open in positive territory, while the gains were restrained by Europe’s negative market trend. In line with expectations, the Indian CPI numbers eased marginally to 7.01%. Global markets were in a bear grip ahead of the release of the US inflation data which is expected to touch fresh highs of 8.8% owing to surge in gasoline and food costs.   

Kunal Shah, Senior Technical Analyst at LKP Securities  

The Bank Nifty index breached the immediate support of 35,000 and witnessed continuous selling pressure throughout the day. It remained in a sell mode, and is likely to test the next support of 34,400 on the downside. The upside resistance is at 35,500 and once this level is taken out traders should place aggressive bets on the long side.   

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

The Nifty was facing resistance from multiple technical parameters in the last few sessions. Consequently, it was witnessing a consolidation in the range of 16000-16275. On July 13, the index broke the key support of 16000 on a closing basis. Thus, the short-term structure has turned in favor of the bears. On the downside, the index is set to test the lower end of a rising channel on the hourly chart, which is near 15800. Overall structure shows that the Nifty can move down towards 15500 in the short term. On the flip side, any bounce towards 16000-16050 is expected to attract a fresh round of selling. 

Rupak De, Senior Technical Analyst at LKP Securities  

Nifty has found resistance at the 50 EMA for the second consecutive session. On the daily chart, back-to-back bearish candles indicate near-term weakness. The RSI on the daily chart indicates a weak price momentum. On the lower end, the index may fall towards 15850, where the lower band of the rising channel lies. On the higher end, resistance is visible at 16200. 

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

An important short- term trend playing out in the market is the weakness in IT and strength in banking. IT is weak on margin pressure in the industry and fears of a possible US recession fallout. Banking is strong due to the strong fundamentals of the banking segment and the impressive credit growth underway in the economy. 

(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.)