InvestorQ : After the sharp correction on Friday, can we expect a bounce in the Nifty and Sensex on Monday 19th September?
shrinidhi Rajan made post

After the sharp correction on Friday, can we expect a bounce in the Nifty and Sensex on Monday 19th September?

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diksha shah answered.
2 weeks ago
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Early trends are positive but volatility is likely to be high on Monday. On Friday, the Nifty fell sharply by 347points to the level of 17,531 on fears that the FOMC meet outcome on Wednesday could see a rate hike of 75 bps or even 100 bps in a worst case scenario. This has raised the spectre of recession in developed markets like the US, EU and UK.

There were hardly a handful of gainers on a day when the selling was led by the IT and consumer stocks. Consumer stocks fell over demand concerns while the IT stocks have taken a sharp hit after Goldman and JP Morgan downsized the top line growth of IT companies by 400 basis points. The pressure was evident in the A/D ratio at an unfavourable 2:48.

Foreign portfolio investors were net sellers in equities on Friday at a level of Rs.3,260 crore as domestic funds and LIC sold stocks worth Rs.37 crore. While the Fed meet is weighing on FPI flows, the FPIs still remain net buyers in equities for September 2022 till date. They had bought 12,084 crore worth of equities, although much lower than in August.

Global markets continued to be tentative on Friday. The Dow Jones was down 139 points while the tech laden NASDAQ was down 104 points as the pressure of a 75 bps likely rate hike built up. Europe saw cuts of over 1% in its key indices while the SGX Nifty is trading 43 points higher in early trades on Monday morning. Pressure is on at higher levels.

The pressure is likely to continue on global markets ahead of the Fed meet conclusion on Wednesday. Fed normally stands by its communication so a 75 bps rate hike looks inevitable now and could be more. One should wait for the language of the Fed and its outlook for the future before taking positions. RBI MPC meet in September end will also be crucial.

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