Dalal Street Corner: Market snaps 3-day winning streak ahead of release Q4 GDP data: What should investors do?

The Indian market three-day rally was put to halt on Tuesday as benchmark indices closed lower by around half per cent as it awaited Q4 GDP Data. Profit booking in banking, financial and energy stocks also weighed on the domestic market. In a three-day back-to-back rally, the Indian market has gained nearly four per cent. The Nifty50 ended higher by 0.9% on Thursday (May 26), settled with gains of 1.13% on Friday (May 27) and added 1.89% on Monday (May 30), before declining on Tuesday.  

Domestic market failed to hold on to recovery mode as it was awaiting the release of Q4 GDP data, said Vinod Nair, Head of Research at Geojit Financial Services. 

GDP is expected to register a slower growth rate of 4.0-4.2% as consumer spending and investments were hit by soaring inflation, he said.  

"A hike in oil prices due to the EU’s ban on Russian oil imports would act as a headwind in taming global inflation. Changes in policy by central banks would be a major factor to be monitored in the coming days," added the expert.  

Meanwhile, the broader Nifty 50 ended lower by 0.46% and the Sensex closed lower by 0.64% as profit booking stopped the indices from advancing further.  

In the broader market Nifty midcap ended marginally lower by 0.13%, while small continued to gain as it ended higher by 1.24% on Tuesday.  

Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas, said Nifty witnessed swings in both directions on May 31 and ultimately formed a Doji pattern on the daily chart. Structurally, the index is taking a pause before further upside, he said.  

"The price action for the last couple of sessions is developing as a 'flag' pattern on the hourly chart. The sideways action can continue in the range of 16500-16700 before the index prepares for the next leg up," said Sharekhan Head of Technical Research.  

On the daily chart, the Nifty had crossed a falling trendline on May 30 & today it has retested the same, said Ratnaparkhi.  

"The overall outlook continues to remain positive from a short-term perspective with the short-term target at 17000. Reversal for the bullish stance can be placed below 16400 on a closing basis," he added.  

Rupak De, Senior Technical Analyst at LKP Securities, said trends may remain choppy going ahead.  
 
Nifty remained volatile during the day before closing around the middle of the range. On the higher end, it found resistance at the 50EMA on the daily timeframe, said Rupak De.  

"Going forward, the trend may remain choppy as long as the index remains below 16700. On the lower end support is visible at 16400," he added. 

As per V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, a major headwind for the Indian economy and markets is crude spiking above $120 on EU sanctions on Russian oil. 

"Financials can remain resilient even in a choppy market," he said.