Dalal Street Corner: Profit booking in banking, financial stocks force market close nearly 1% lower; what should investors do on Thursday

The Indian markets ended nearly 1% lower as profit booking in banking and financial shares pulled down headline indices amid weak global cues on Wednesday. Benchmarks Nifty 50 and the Sensex declined by 0.94% each as sell off in global market, elevated energy prices weighed on the domestic equity market on Wednesday. Though all sectors slipped in the red, it was banking, financial, oil & gas and consumer durables that came under tremendous pressure on Wednesday. 

"Market continued to be gripped by high volatility following a heavy selloff in the global markets led by elevated energy crisis and weak Chinese economic outlook underpinned by prospects of US rate hikes," said Vinod Nair, Head of Research at Geojit Financial Services. 

Investors are weighing the possibility of a global slowdown due to monetary tightening by central banks, lockdown in China and Russia -Ukraine war, said the expert. "This has resulted in an outflow of funds from equity markets to safe havens," he added.  

Meanwhile, Nifty 50 closed just above 17, 200 and the Sensex near 56,800 as only 10 and 6 shares respectively advanced on the benchmarks.  

In the broader market, Nifty mid cap declined by 0.86% and small cap dropped by 0.61% with India Volatility Index cruising towards 21-mark.  

Speaking on technical chart of Nifty, Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas, said the index, with a minor degree bounce on April 26, had reached near a falling trendline on the hourly chart, which was around 17200. Thereon, the index nosedived on April 27, he said.  

"Structurally, the price action over the last few sessions have taken form of a triangular pattern, which is expected to be a continuation pattern in this case. The index can witness a brief consolidation in the range of 17150-16900 & can ultimately break out on the downside," he said.  

Thus, from short term perspective, the Nifty is expected to test the swing low of 16824, below which 16600 will be the subsequent target to watch out for, the expert added.