Fears about Fed, tremors in Taiwan’s markets

While the Nifty index of the National Stock Exchange closed 268 points or 1.51% lower at 17,490.7, the BSE Sensex closed 1.46% lower at 58,773.87. The rupee weakened by 9 paise to $ 79.87 per dollar. The Dow Jones index traded 1.2% lower in the early days, reflecting rising risk-off sentiment.

Bank Nifty was one of the worst-performing indices in India, falling nearly 2% to 38,298. Tata Steel, Asian Paints, Adani Ports, Tata Motors and JSW Steel were top index losers, falling 3-4.5%.

Foreign Institutional Investors (FIIs) became net sellers for the first time this month, offloading shares of a provisional value 454 crore as per BSE data.

By August 19 he had bought shares worth 46,000 crore after being a net seller of 56,338 crore during the financial year.

Vinod Nair, Head of Research, Geojit Financial Services, said, “The market consolidation had begun in anticipation of a tighter monetary policy by the Fed and a slowdown in global economic activity.” The current risk-reward is not in favor of investors as the Nifty 50 Now trading at a premium valuation of 21.5x P/E (one year forward basis) above the long term average. The rising dollar index and higher US 10-year bond yields act as near-term headwinds for the market,” he said.

Monday’s fall was the second consecutive loss since Friday when the Nifty fell just eight points below 18,000.

Opinions were mixed on where the market might go next. While some expected a fresh breakout or a consolidation within a narrow range until the breakout, others said the trend has reversed after a 17% rally from the mid-June low of 15,183 to 17,992 on August 19.

Rajesh Palviya, Vice President of Research, Axis Securities Ltd. said, “Key indicators such as the Relative Strength Index suggest that we were overbought, and a sharp rally is about to be followed by a correction. The correction could extend to 17,300, after which the market was at that level. and may consolidate between 17,800.”

However, Rohit Srivastava, a technical expert at India Charts, said the correction indicated a “trend reversal”. He expects Nifty to test the June low of 15,183 in the next few months.

“Rarely have we seen a retracement of more than 80% of a fall; it didn’t happen even during the market crash of 2008,” said Srivastava, from a record high of 18,604 on October 19 last year to 15,183 on June 17 this year, and later Said citing the rally to a high of 17,992 on August 19. , is a retracement of over 80% of the decline from October to June.

Besides Nifty not being able to break the psychological mark of 18,000, Nifty 500’s inability to break the January high of 15,795 and April high of 15,478 also indicated a correction.

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