The Indian markets on Monday slipped for the third straight session as both the frontline indices slipped nearly 2 per cent each; Sensex closed over 1000 points and Nifty50 settled below 17250. In the broader markets, Nifty mid-cap outperformed the benchmarks, closed over 1 per cent lower. 

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Selling pressure from foreign investors amid weak global cues; the three-day Monetary Policy Committee meeting of the Reserve Bank of India this week and the mute third quarter results of most of the Nifty50 companies are the reasons for volatility in the overall market.  

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Weak Global Cues 

On Friday, the US markets saw sharp volatility as jobs data beat estimates resulting in spike in bond yields to hit almost 2 per cent. Asian markets opened mixed with the Japanese 'Nikkei' was down by 200 points in the early morning trade. While the crude oil rose to the highest level since 2014. 

Global cues are also not clear where the geopolitical situation is important while rising crude oil prices is a key concern for our market, Santosh Meena, Head of Research, Swastika Investmart said. 

Selling Pressure from FII 

Foreign Institutional Investors (FIIs) sold shares worth Rs 2267.86 crore in cash and bought Rs 621.98 crore in index futures during Friday’s session and the same trend is seen on during Monday’s trade too. 

FIIs are cautious on the Indian markets mainly due to factors: weak global cues and RBI MPC policy meet decision on interest rates is scheduled later this week. FIIs are still in a selling mood and their behaviour will also play an important role in the direction of headline indices. 

RBI Policy 

The Reserve Bank of India’s MPC panel is scheduled to announce their policy meet decision later this week. Analysts expect the committee to likely change the stance from accommodative to neutral, and may tinker reverse repo rate, which is at 3.35 per cent currently. 

The three-day meeting which was set to take place from Monday onwards is postponed to Tuesday, amid the national holiday declared on the demise of legendary singer Lata Mangeshkar. 

Mute Q3 Earnings 

Most of the Nifty companies results, except banks have been mute in the third quarter as the margins are still under pressure. The market analyst Sandeep Jain had said the margins are mainly impacted due to the persisting supply chain issues.  

The top laggard of all sectors is Auto – which is somehow till battering the semiconductor issue. The same was notified by Tata Motors during their Q3 earnings statement. However, also expect the last quarter of FY22 may see overall improvement. 

Technical Check 

Technically, Nifty is halting near 20-DMA after a strong pullback where 50-DMA of 17438 is an immediate and important support level where if Nifty manages to hold this level then a bounce back can be seen but Nifty needs to cross 17800 level to gain strength towards 18300/18600 levels, the market analyst said. 

If Nifty slips below its 50-DMA then further weakness can be expected where the budget day's low of 17244 will be the next important support level while 17000-16800 is the next demand zone, he added.