The benchmark indices ended lower for the second straight session on Monday 22nd August 2022 on selling across all sectors. A consolidation was triggered in the market on anticipation of tighter monetary policy from the Fed and concerns about a slowdown in global economic activity. The current risk reward does not favor investors as the Nifty50 now trades at a premium valuation of 21.5x P/E (on a 1-year Fwd basis), which is above the long-term average. Rising dollar index and higher US 10-year bond yields act as short-term headwinds for the market. While the correction was some time overdue after the recent rebound, renewed worries about a likely dovish stance from the US Federal Reserve at its September meeting and a stronger dollar index jittered investors, triggering a massive decline in banking, IT, metals and real estate stocks. At the close, the Sensex was down 872 points to 58773 and the Nifty down 267. The Bank Nifty Index saw continued selling pressure throughout the day with lower highs and lower lows. Market sentiment could remain volatile in coming sessions as focus would shift back to global concerns of falling crude oil prices amid weakening demand, and US-China tussle over Taiwan. The immediate upside resistance is placed at 38500 and a break above this will see a rally toward the 38,800-39,000 zone. The downside support stands at 38,000 and if breached will see further selling pressure toward 37,700 levels. Technically, a sharp intraday sell off and bearish candle on daily charts is indicating a continuation of weakness in the near future. However, a quick pullback rally is likely if the index trades above its key resistance level of 17575. Below the same, the correction wave will continue till 17400-17350. Nifty slipped back below the falling trend line, indicating a failed breakout. On the lower end, the price has corrected towards the support zone of 17500-17400. Over the near term, a fall below 17400 may trigger a further correction in the market. On the lower end, support is visible at 17200/17000. On the other hand, the Nifty may recover towards 17700 if it doesn't fall below 17400. The Nifty had formed a Shooting Star candlestick pattern on the weekly chart for the last week. Also, on the daily chart the index had seen few bearish developments on August 19. Thus, follow through action was witnessed on the downside on August 22. In the week gone by, the index had crossed a falling trendline; however, it couldn’t sustain in the higher territory & has tumbled below the trendline today. This shows that the bears are having upper hand currently. The short-term momentum indicators are also in favor of the bears. Thus, the index is likely to witness further decline in the coming sessions. It can test 17300 & 17000 on the downside. On the other hand, 17700-17750 will act as a near term hurdle zone.
Resistance: 17900, 17950, 18000
Support: 17800,
17700, 17600
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