Markets Alert: How Sensex, Nifty 50 Will React On Wednesday? Key Triggers Here

Indian markets will resume trading on Wednesday after a one-day lag. Trading on stock exchanges BSE and NSE was closed on August 15 due to The celebration of the 77th Independence Day. However, global stocks were squeezed near their 5-week low as China's economic worries dampened the mood. Also, treasury yields have climbed to a nine-month high, while the dollar index hit its highest mark in over a month.

As per a Reuters report, global stocks were stuck near five-week lows on Tuesday as rising government bond yields unnerved investors, while rate cuts from China and disappointing data underscored the economic malaise gripping the world's second-biggest economy. European stocks fell almost 0.8%, U.S. stock futures pointed to a weak open on Wall Street while Asian shares fell 0.4%.

While the US 10-year treasury yield soared to 4.22% at a nine-month high. Further, Germany's benchmark 10-year yield jumped to its highest level since March 9 to 2.691% as the selloff deepened globally.

In a surprising move, the People's Bank of China on Tuesday cut its MLF rate to 2.5%, a big cut from earlier 2.65%. Also, the central bank has trimmed the 7-day reverse repo rate to 1.8% from the previous 1.9%. This rate cut does provide some comfort that economic help was on the way.

How BSE and NSE performed on August 14:

On Monday, Sensex ended at 65,401.92, up by 79.27 points or 0.12%, while Nifty 50 edged higher by 6.25 points or 0.03% to end at 19,434.55. India's volatility index ended at 4.10%. Bank Nifty shed over 108 points. IT stocks saved the day with Infosys shares emerging among top gainers. Buying in heavyweights like Reliance Industries and Hindustan Unilever further lifted the performance in the final minutes, offsetting a sharp selloff in Adani stocks.

In the broader market, BSE Midcap and Smallcap indexes slipped by 132.68 points and 177.40 points respectively on Monday. In terms of sectoral indices, metal stocks were worst hit as the index on BSE shed nearly 397 points, followed by BSE Consumer Durables and Bankex down by 215.95 points and 145.93 points respectively. On the contrary, the BSE IT index soared by 199.29 points.

Meanwhile, at the interbank forex market, the Indian rupee fell to near its 10-month low on August 14 and even crossed the 83 mark against the US dollar, owing to the strong greenback and losses across Asian peers. After hitting the day's low of 83.1525, the rupee ended at 82.95 per dollar compared to its previous session's print of 82.8450 per dollar.

Also, foreign institutional investors (FIIs) were net sellers with an outflow of Rs 2,324.23 crore, while domestic institutional investors (DIIs) invested Rs 1,460.90 crore in Indian stocks.

What to expect on Wednesday?

According to Ajit Mishra, SVP - Technical Research, Religare Broking, Markets started the week on a volatile note and ended almost unchanged. After the initial fall, Nifty recovered gradually as the day progressed and finally settled at 19426.30 levels. Meanwhile, a mixed trend was witnessed on the sectoral front wherein IT, FMCG and media edged higher while metal, realty and financials ended in the red.

He added, "Nifty respected the support zone of the short-term moving average i.e. 50 EMA, after penetrating the previous swing low at 19,300 levels. Despite the corrective tone, we have been seeing resilience in select heavyweights, which is not only keeping a check on the pace of decline but also triggering recovery in between. We feel it is prudent to stay focused on trade management amid mixed signals and wait for clarity."

Also, on Nifty 50, Rupak De, Senior Technical analyst at LKP Securities said, "The Nifty index displayed volatility throughout the trading session, before ending the day with minimal change. On the daily chart, it's evident that the index received support at the 50EMA, leading to a notable intraday rebound. However, the RSI on the daily chart demonstrated a bearish crossover, with its value dropping below 50. This could be indicative of a weakening trend. If the index falls below the 19250 mark, it might incite a corrective movement toward the 19100-19150 range in the near future. Conversely, resistance can be identified at the 19550 level on the higher side."

In the case of Bank Nifty, Rupak De, Senior Technical analyst at LKP Securities, The recent Bank Nifty closing formed a doji candlestick pattern on the daily chart. Support at 43800 signifies its resilience, while substantial put writing at 44000 suggests confidence in its stability. However, call writing at 44500 could hinder upward movement. A "sell on rise" strategy might be prudent until a clear breakout above 44500 resistance is observed, as per the analysis."

Indian stocks will react to the CPI inflation data. India's consumer price index (CPI) accelerated to 7.44% in July 2023, which is the highest level since April 2022, and also higher than expectations. The latest inflation print has breached RBI's upper tolerance limit of 6%, signalling the possibility of a rate hike in the upcoming policies.

Disclaimer:

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