Trade Setup For Wednesday: MPC Meet, Dollar, Treasury Yields Key Factors To Know Before Opening Bell

The Indian market is expected to be under pressure on Wednesday due to sharp selling in global stocks as treasury yields touched their highest level since 2007 and the dollar index climbed to a 10-month high. Continued foreign funds outflow is likely to take a further toll.

Investors will also focus on India's rate decisions as the six-member MPC three-day monetary policy meeting begins from today onward. Also, India's manufacturing PMI dropped to its lowest level in five months at 57.5 in September 2023.

In the previous session, Sensex ended at 65,512.10, down by 316.31 points or 0.48%, while Nifty 50 shed 109.55 points or 0.56% to end at 19,528.75. Bank Nifty tumbled by 0.42% to close at 44,399.05. PSU Bank stocks outperformed, while oil & gas and auto stocks saw the most selling. Broadly, the market held a bearish tone. India's volatility index surged 3.2%.

On the performance, Vinod Nair, Head of Research at Geojit Financial Services said, "Consolidation continued given the rising US bond yields and dollar index, prompting FIIs to pull funds. While the moderation in oil prices may provide respite on the downside. Infrastructure activity indicates an acceleration led by the rise in core sector output. The auto stocks declined due to mixed bag monthly data, while a near-normal monsoon will aid positive sentiment for consumption in the near term."

Gift Nifty:

Gift Nifty, formerly known as SGX Nifty, traded at 19,453.5, down by 98.5 points or 0.50% in early trade on Wednesday. The benchmark traded in the range of 19,625 and 19,450 after opening at 19,552.

Day Trading Guide For Wednesday:

Vaishali Parekh, Vice President - Technical Research, Prabhudas Lilladher expects a support level in the range of 19,400/19,350 for Nifty 50 on Wednesday, however, resistance is factored around 19,700/19,750. While she sees Bank Nifty as having a support level of 44,200/44,150 with resistance around 44,800/44,850.

To investors, Ajit Mishra, SVP - Technical Research, Religare Broking said, "Besides, resilience in midcap and smallcap space is also offering opportunities on the long side. We thus recommend maintaining focus on stock selection while keeping a check on leveraged trades."

Intraday Stocks Picks:

Parekh recommended buying three stocks during Wednesday's trade. These are:

1. NCC Ltd: Buy at Rs 160.60 with a stop loss of Rs 157 for a target price of Rs 172.

2. Royal Orchid Hotels: Buy at Rs 308.65 with a stop loss of Rs 303 for a target price of Rs 320.

3. UCO Bank: Buy at Rs 44.75 with a stop loss of Rs 43 for a target price of Rs 43.

Nifty Spot Index Support Level:

Rupak De, Senior Technical analyst at LKP Securities said, Nifty ended the session with a selling pressure following a volatile trading day. Towards the downside, the index found support at the ascending trendline on the daily chart. The sentiment looks pessimistic for the short term. Looking ahead, the level of 19,480 is expected to serve as a pivotal "make or break" point. If there is a decisive decline below 19,480, it might trigger heavy selling in the market. On the upside, 19,600 will continue to remain a significant resistance level.

Bank Nifty Index Support Level:

Kunal Shah, Senior Technical and derivative analyst at LKP Securities said, Bank Nifty bBullshave successfully defended the crucial support level of 44,200, which is being seen as a make-or-break point for the index. On the upside, the index faces resistance around the 44,800 mark. It's worth noting that the index is still trading below its 20-day moving average (20DMA), suggesting a cautious "sell on the rise" sentiment in the market. Currently, the Bank Nifty is consolidating within a broad range of 44,200 to 44,800, and a decisive break on either side, confirmed by a closing basis, is expected to determine the continuation of the prevailing momentum.

Stocks In News Today:

HDFC Bank, Raymond, Adani Enterprises, Avenue Supermarts, South Indian Bank, Hero MotoCorp, Hero MotoCorp, and Updater Services are key stocks that will be in focus on October 4th.

FII And DII Data:

On Tuesday, foreign institutional investors (FIIs) continued to pull out their money from Indian stocks and recorded an outflow of Rs 2,034.14 crore. Meanwhile, domestic institutional investors (DIIs) minimised some of the losses from FPIs selling by becoming net buyers with an inflow of Rs 1,361.02 crore.

Global Trends:

Wall Street nosedived due to a strong upside in bond yields and the dollar. The benchmark 10-year bond yield touched its highest level in 16 years 4.8% owing to hawkish remarks of the Federal Reserve has bloomed fear of higher interest rates for a longer duration to tame inflationary pressures. Also, 30-year treasury notes touched their highest mark since 2007 at 4.925%.

Meanwhile, the dollar index zoomed to touch its highest level since November last year, against a basket of other world currencies. Due to the strong dollar, gold has slipped significantly to touch a seven-month low of $1830 an ounce.

The Dow Jones Industrial Average index ended at 33,002.38, down by 430.97 points or 1.29% on Tuesday. The S&P 500 index shed 1.4% to close at 4,229.45, and the tech-heavy Nasdaq Composite index was the worst hit with a downfall of 248.31 points or 1.87% to finish at 13,059.47.

The Asian market has also taken a hit!

Disclaimer:

The recommendations made above are by market analysts and are not advised by either the author or Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.