Trade Setup For Sensex, Nifty On August 21: FOMC Minutes In Focus; What Should Investors Do?

Indian stock market is likely to witness a flattish to mild pullback in the opening bell of Wednesday with a focus on FOMC meeting minutes that will be released later in the day. Gift Nifty has witnessed a volatile trend and is currently near its intraday low of 24,682.50. Also, Asian shares traded lower, tracking Wall Street which overnight halted its eight-consecutive days winning streak.

In the early trade of Wednesday, Asian shares halted its three-day winning streak, following the trend of Wall Street. Shares of Japan, Hong Kong, and South Korea were in a bearish tone. Japan's inflation data will be keenly watched ahead.

Ahead of the Jackson Hole Economic Symposium, US stocks closed in the red with Dow Jones Industrial Average down 61.56 points or 0.15%, to 40,834.97, followed by its counterparts such as the S&P 500 which dipped 11.13 points or 0.20%, to close at 5,597.12, and lastly, the Nasdaq Composite that slipped by 59.83 points, or 0.33%, to end at 17,816.94.

In the previous session, the Indian stock market gained driven by midcap, auto, banking, IT and healthcare stocks. Sensex ended at 80,802.86 up by 378.18 points or 0.47%. While Nifty 50 closed at 24,698.85 higher by 126.20 points or 0.51%. Bank Nifty surged by 434.80 points or 0.86% to end at 50,803.15.

Talking about the performance, Vinod Nair, Head of Research, at Geojit Financial Services said, The domestic market started the session with a strong surge, buoyed by positive global sentiment amidst Israel-Hamas ceasefire talks and diminishing US recession fears due to recent favourable data. Concurrently, easing geopolitical risks and weak China demand have led to a decline in crude prices, benefiting the domestic economy. Meanwhile, inflationary pressure in Japan and the appreciating Yen cautioned the rally. This week's Japan inflation data and FOMC minutes will provide insights into future interest rate trajectories and market trends."

On August 21, Shiju Koothupalakkal - Technical Analyst at Prabhudas Lilladher expects the Nifty 50 to find support at 24,500 and resistance at 24,800. Bank Nifty is seen to have support and resistance around 50,400 and 51,400 respectively.

Koothupalakkal has recommended buying three stocks on August 21. These are:

- BUY REC LTD cmp 599.90 Stop Loss 587 Target 630

- BUY BF UTILITIES cmp 800 Stop Loss 780 Target 850

- BUY UNION BANK cmp 125.56 Stop Loss 122.50 Target 134

According to Shrey Jain Founder and CEO SAS Online - India's Deep Discount Broker, the Nifty index is currently stabilizing around its key Call levels of 24,500 and 24,600. If it manages to stay above 24,600, it could trigger short covering and potentially drive the index up to around 24,800. The 24,600 Call strike has significant open interest of about 53 lakh shares, showing strong market activity. On the Put side, the 24,500 strike also has notable open interest with approximately 51 lakh shares.

On Bank Nifty, Jain said, the Bank Nifty has been somewhat lacklustre due to selling pressure on major private sector banks, which has capped its gains. We expect the Bank Nifty to remain within a broader range of 50,300 to 51,000.

Further, Siddhartha Khemka, Head - of Retail Research, Motilal Oswal Financial Services Ltd said, "After consolidating at higher levels over the last few days, the Nifty saw recovery amidst global markets recovery and we expect this momentum to continue in the near term. The broader market is expected to continue its outperformance supported by sectorial rotation. All eyes will be on the US FOMC meeting minutes which will be released on Wednesday."

Overall, Jain added, "market sentiment remains optimistic, making a "buy on dips" strategy still a good approach."