Wednesday Trade: Sensex, Nifty May Open In Green, But Volatility Remains; 3 Stocks To Buy

Indian market is likely to open in green on Wednesday, however, the sentiment continues to be volatile owing to struggling global cues. In the early hours, Gift Nifty traded higher, hinting at a positive start for Sensex and Nifty 50, on the other hand, the Asian counterpart traded mixed as US stocks broadly dipped overnight. In the previous session, Sensex and Nifty 50 ended flat with midcap and smallcap stocks outperforming the broader markets.

Gift Nifty, formerly known as SGX Nifty, traded at 19,357.5, up by 43 points or 0.22% at 7.32 am on Wednesday. The index opened at 19,314.5 and traded in the range of 19,362 to 19,324.0 respectively.

Meanwhile, in the early Asian hours, stocks were broadly mixed after Wall Street retreated from its bull tone which was driven by tech rallies at the start of the week, as fears that the US Federal Reserve is likely to keep higher interest rates for a longer-than-expected dampened mood.

Investors will keenly watch Nvidia Corp.'s earnings scheduled later on Wednesday, while wider markets eye the US Fed chair's speech on Friday.

Japan's Nikkei 225 traded up by up by 0.25%, South Korea's KOSPI index was slightly lower, while Australian index ASX 200 traded up by 0.7%. Hong Kong's Hang Seng index dipped marginally, and China's mainboard Shanghai Composite index slipped by 0.7%.

However, US stock futures inched up in the Asian market hours after the S&P 500 Index extended its losing streak on Tuesday.

Overnight, Wall Street broadly ended lower with Dow Jones and S&P 500 taking a massive beating as banking stocks came under pressure after S&P Global Ratings joined Moody's Investors Service in cutting some US lenders amid a tough climate. Also, traders cautiously await Fed Chair Jerome Powell's speech in Jackson Hole, Wyoming.

The Dow Jones Industrial Average index ended lower by 175 points, while the S&P 500 index settled down by 0.3%. The Nasdaq Composite Index managed to enter in green zone with a marginall upside.

As per Reuters, the benchmark 10-year Treasury yield hit almost 16-year highs overnight on the view the Fed could keep rates higher for longer. Higher borrowing costs can slow spending by businesses and consumers.

At home, on Tuesday, Sensex ended at 65,220.03, up by 3.94 points or 0.01%, while Nifty 50 inched up by 2.85 points or 0.01% to end at 19,396.45. However, the BSE Midcap and Smallcap index outperformed by advancing 287.88 points and 314.81 points respectively. Capital goods, consumer durables, FMCG and auto stocks were top gainers, while slight selling was seen in IT and banking stocks.

On the trading performance on August 22, Vinod Nair, Head of Research at Geojit Financial Services said, "Despite the support of positive international markets, Indian equities struggled to maintain their upward momentum due to lingering apprehensions over ongoing global uncertainties. Sectors closely tied to the Western economy, such as IT and pharma, faced challenges, while domestic-oriented sectors, alongside mid- and small-caps, exhibited resilience and gained traction. The influence of higher bond yields and concerns about potential rate hikes in the US is prompting FIIs to withdraw funds from the domestic market, contributing to the market's volatility."

Wednesday's Trade Guide:

Vaishali Parekh, Vice President - Technical Research, Prabhudas Lilladher expects the Nifty Spot Index to find support around 19,300/19,250 during Thursday's trade, while resistance is seen at 19,550/19,600. Further, the Bank Nifty spot index is likely to find support in the range of 43,700/43,650 and resistance is seen between 44,500/44,550.

Intraday Stock Picks:

Parekh has recommended 3 stocks to buy on Thursday:

- Buy L&T Finance at Rs 123.70 with a stoploss of Rs 121 for a target 131

- Buy Bharat Dynamics at Rs 1146 with a stop loss of Rs 1135 for a target 1190

- Buy NLC India at Rs 128.75 with a stop loss of Rs 126 for a target of 137

Also, Ajit Mishra, SVP - Technical Research, Religare Broking said, "We see the recent rebound as a counter move within the corrective trend as Nifty has multiple hurdles to cross to change the tone. Meanwhile, a mixed trend across sectors is offering opportunities on both sides. Participants should align their trades accordingly while keeping a check on position size."

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.