The Indian stock market witnessed sharp swings in Wednesday’s trade, with stocks retreating from their opening gains and slipping into deep losses towards the close after the RBI raised interest rates by an expected 25 basis points amid persistent inflationary pressures and strong economic growth.
Equities opened higher and extended their two-day winning run, but a sharp reversal in financials and autos, along with heavy selling in metals, dragged the frontline indices lower, wiping out much of their recent gains.
The RBI was the latest central bank to raise interest rates, joining the US Federal Reserve, Bank of Japan and European Central Bank, as the ongoing crisis in the Middle East has triggered inflationary pressures, squeezed purchasing power and weighed on currencies.
In addition, domestic conditions also remained weak, with poor monsoon rains linked to El Niño compounding price pressures in Asia’s third-largest economy.
Indian stock market today
The Nifty 50 closed 0.70% lower at 22,615, while the Sensex finished at 72,648, down 0.57% from Tuesday’s close. Both indices resumed their losing run following a two-day relief rally.
The broader markets, however, closed mixed, with the Nifty Midcap 100 index falling 0.61%, while the Nifty Smallcap 100 index advanced 0.38%.
All major sectoral indices ended in the red, with metals bearing the brunt of the selling, followed by realty, auto, consumer durables, technology and FMCG. On the flip side, PSU banks and media finished higher.
Meanwhile, tensions have escalated in West Asia, as Iran stepped up its attacks on vessels in the Strait of Hormuz. This dampened optimism just as shipments through the waterway were approaching pre-war levels, pushing Brent crude towards $101 a barrel.
The US 10-year Treasury yield topped 5.30% as Tuesday’s rebound fizzled out, while the dollar resumed its gains amid rising yields and safe-haven demand. Global markets remain unsettled as energy prices and inflation expectations keep yields near multi-decade highs.
Asian markets today: Can Nikkei hold above 69,000 as profit-taking sets in?
Asian markets traded largely lower, with major indices coming under pressure after US stocks climbed to fresh highs on Tuesday despite a host of challenges.
In Tokyo, the Nikkei 225 lost 0.9% to 70,035.71, while South Korea’s Kospi dropped 2% to 6,803.90. Hong Kong’s Hang Seng fell 0.6% to 24,130.50, while Taiwan’s Taiex was nearly unchanged. Markets in Shanghai remained closed for a national holiday. In Australia, the S&P/ASX 200 erased its early gains to edge 0.1% lower, closing at 8,727.70.
Vipin Kumar, AVP-Research at Globe Capital Market, said the Nikkei index witnessed some sort of profit-taking following a sharp rise from 63,000 to 70,700 spot levels. Going ahead, Vipin Kumar maintains a buy-on-dips trading approach on the index and suggests that traders wait for a further dip towards the 69,000-spot level before initiating fresh long positions.
On the Kospi index, Vipin Kumar said the index extended its sideways journey within a congestion range, with immediate support around the 6,700–6,580 spot zone and resistance around the 7,220-spot level. A decisive close above 7,220 is essential for a sustainable upward move towards the 7,800 spot level, according to Vipin Kumar.
On the Dow Jones index, Vipin Kumar said it breached a past five-day congestion zone on the higher side but failed to hold at higher levels. The chart structure remains constructive, with immediate support around the 50,800–50,500 spot levels and resistance around the 52,200–52,300 spot levels.
Nifty outlook: Can the index hold above 22,600 amid rising bearish signals?
For the benchmark Nifty index, Vipin Kumar said it failed to hold at higher levels and fell after facing resistance around the previously mentioned resistance zone of 22,800–22,850. Going ahead, Vipin Kumar expects some sort of consolidation in the 22,300–22,800 zone before the index takes any directional stance. Geopolitical tensions, persistently high crude oil prices, rising US bond yields, and a depreciating INR remain key headwinds for domestic equity markets, Vipin Kumar said.
Rupak De, Senior Technical Analyst at LKP Securities, said the Nifty has slipped lower after finding resistance at the 50-EMA on the hourly chart. The index has shown the first sign of reversal by forming a bearish candle following a strong bullish candle. The hourly RSI has also witnessed a bearish crossover. The next few days will be important, as a decisive fall below 22,600 might reignite bearishness in the market.
On the lower end, a break below 22,600 could drag the index towards 22,200 levels. On the other hand, a sustained rise above 22,750 might bring some bullishness back into the market, Rupak De added.
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