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ICICIdirect Research Posted on 09:19am 22-Sep-2022

In today's session index is likely to witness gap down opening tracking weak global cues owing to Fed rate hike.

Market Outlook

Equity benchmarks took a breather after past two session’s pullback amid muted global cues. The Nifty ended Wednesday's session at 17718, down 98 points or 0.5%. The market breadth turned negative with A/D ratio of 1:2.2. Sectorally, barring FMCG, all major indices ended in the red weighed by metals and pharma.


Technical Outlook

  • The Nifty started the session on a flat note yet failed to sustain above 17800 mark and gradually drifted downward. As a result, daily price action formed a bear candle carrying lower high-low, indicating a breather
  • In today’s session index is likely to witness gap down opening tracking weak global cues owing to Fed rate hike. The index has been consolidating in the broader of 18000-17300 amid stock specific action tracking elevated global volatility. The lack of faster retracement on either side signifies prolonging of consolidation. The ongoing healthy consolidation has helped index to cool off overbought conditions (daily and weekly stochastic oscillator cooled off to 43 and 58, respectively).Thus, extended breather should not be construed as negative instead dips should be capitalised on to accumulate quality stocks to ride next leg of up move towards January 2022 high of 18300. we reiterate our positive stance based on following observation:
  • over past four weeks, the index has undergone slower pace of retracement by retracing merely 38.2% of mid-July-August rally (15850-18000), thereby making market healthier
  • Brent crude prices continue to trend downward after breaking their two-year support trend line. In coming weeks decisive break below 86 would lead further declines
  • Indian equities continue to relatively outperform in the face of global volatility. Nifty 500 ratio against S&P 500 has given a breakout from decade long consolidation underscoring relative outperformance ahead


Today's calls

Intraday – Hindustan Unilever, Cipla

Positional – Devyani International


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