Stock Market Expiry- Top Few things before the opening bell

Bears seem to have kept tight control over Dalal Street, pushing the benchmark indices down by nearly one percent on September 28 ahead of the monthly expiry of futures & options contracts. The fall in global peers and consistent FII selling weighed on sentiment.

The BSE Sensex plunged 509 points to 56,598, while the Nifty50 fell 149 points to 16,859 and formed Doji kind of pattern on the daily charts, indicating indecisiveness among bulls and bears about the future market trends.

"Normally, such formation after a reasonable weakness calls for a pullback rally from the lows. But the overall market trend is still weak and there is no confirmation of any buying emerging from the lows," said Nagaraj Shetti, Technical Research Analyst at HDFC Securities.

He thinks the Nifty is now placed at the crucial support of 16,800 levels as per the concept of change in polarity. The said level has been a crucial value area in the past and has witnessed significant moves from its supports and its resistances in the past.

Having declined down to the support, there is a possibility of a minor pullback rally in the market from near 16,800-16,750 levels in the next 1-2 sessions. Immediate resistance is placed at 17,000 levels, the market expert said.

The selling pressure was also seen in broader markets as the Nifty Midcap 100 and Smallcap 100 indices fell 0.3 percent and 0.5 percent, respectively, while India VIX, the fear index, increased by 2.44 percent to 22.10 levels.

Inflation shifts investor attention away from China slowdown, says economist

A generational surge in inflation in advanced economies is stealing the attention of investors from a generational slowdown in China that is arguable of much greater importance for the long-term global outlook, according to the Group Chief Economist at Capital Economics.

"We recently lowered our forecast for this year's officially reported GDP growth rate to 3 percent from 4 percent – the government's 5.5 percent target set in March has been quietly abandoned – but in reality don't expect the Chinese economy to grow at all," Neil Shearing said in a note.

"The conventional response in Beijing to such weakness would be to loosen policy. But the past week has again revealed the constraints under which policymakers in China are operating."

China's zero-Covid policy has hurt growth in recent months even as a slowing global economy weighs on demand for its exports. Central banks across the world are also tightening monetary policy at a sharp pace to curb red-hot inflation, further exacerbating growth woes.

Financial markets have whipsawed. The S&P 500 sank to the lowest since December 2020 overnight and the US Treasury yields continued to rise, with the 10-year rate climbing to the highest since April 2010.

After a decade-long run of giddying expansion, mounting evidence of bad economic news from China reflects a structural slowdown that's now in full train. Investors can be forgiven for having more immediate concerns on their mind, but they should be paying attention."

Amid a surge in the dollar, the People's Bank of China is trying to prevent the renminbi from going much beyond the seven-to-a-dollar level. The Chinese central bank on Monday hiked the reserve ratio for currency forwards, a move aimed at deterring speculation against the renminbi.

While there is nothing sacrosanct about the seven-to-a-dollar level, it is the line in the sand that policymakers appear to have drawn amid concerns that an overt weakening of the currency could encourage capital outflows, which would, in turn, destabilize the domestic financial system, Capital Economics said.

Technical View of Nifty defends 17,000

 Due to markets being in oversold territory, we could witness a quick pullback rally," Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities said.
For traders, the 200-day simple moving average (SMA - 16,992) and 16,850 would be a key support level. On the flip side 17,150 and 17,200 could be the immediate hurdle for the bulls," the market expert said.
The elevated volatility also caused a favorable trend for bears. The India VIX, which measures the expected volatility in the market, rose by 6.31 percent to 21.89 levels.
On the Option front, we have seen maximum Call open interest at 18,000 strike followed by 17,500 strike, with Call writing at 17,200 strike then 17,100 & 17,300 strike, while the maximum Put open interest was seen at 16,000 strike followed by 17,000 & 16,500 strikes, with Put writing at 16,500 strike then 16,000 strike.
Also read - Exuberance in broader market subsides as September turns somber
The above Option data indicated that the Nifty may remain in a range of 16,800 to 17,500 in the near term.
The Nifty Bank also corrected sharply, opening more than 500 points lower at 39,028 and corrected up to 38,492. The banking index defended the 38,500 level and closed with 930 points losses at 38,616 and formed a bearish candle on the daily charts, with lower high and lower low formation.
"The Nifty Bank index has breached its important support levels and pull-back rallies should be utilized to initiate fresh short positions," Kunal Shah, Senior Technical Analyst at LKP Securities said.
The higher-end resistance is visible at the 39,500-40,000 zone and the next support is seen at the 38,000 level, he added.
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Nifty defends 17,000, relief rally likely as index looks oversold

 The index has seen the formation of a bearish candlestick pattern on the daily charts. The 50-share benchmark index has defended the 17,000 mark due to a bit of recovery in late trade, hence if the index manages to sustain the same crucial mark then, according to experts, there could be a temporary relief rally in the market after being looked oversold. However, if the index fails to hold on to the said level then there could be a fair chance of the index breaking 16,900-16,800 levels in the coming days, experts feel.
The Nifty50 had a gap down opening and plunged more than 300 points for a second consecutive session as bears held tight control over Dalal Street, tracking southward journey in global counterparts amid rising recession fears in the western world. Consistent FII selling and weakening currencies with the strengthening dollar also dampened equity market sentiment.
The index has seen the formation of a bearish candlestick pattern on the daily charts. The 50-share benchmark index has defended the 17,000 mark due to a bit of recovery in late trade, hence if the index manages to sustain the same crucial mark then there could be a temporary relief rally in the market after being looked oversold, but if the index fails to hold on to the said level then there could be a fair chance of index breaking 16,900-16,800 levels in coming days, experts feel.
All sectors, barring IT, traded in the negative territory. Auto, Metal, Realty and Oil & Gas were the biggest losers, falling between 3 percent and 4 percent. The severe selling pressure was also seen in the Nifty Midcap 100 and Smallcap 100 indices which corrected more than 3 percent each.
The Nifty50 started off trade lower by around 150 points and remained under pressure throughout the session to hit a day's low of 16,978, though it attempted some recovery. The index finally settled with 311 points or a 1.8 percent loss at 17,016, continuing the downtrend for the fourth consecutive session.

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