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.

Correction destroys Rs 18 lakh crore of investors’ wealth in last 9 days

 Foreign institutional investors or FIIs have been net sellers to the tune of Rs 4,362 crore last week, dampening the market sentiment more.
The overall market has been range-bound, though there has been a sharp run up from June lows. This range-bound trade is expected to continue in coming weeks, experts said.
“Since the June lows, the markets have seen a sustainable recovery, and given the domestic demand and insignificant recession risk for India, we do not see the market breaking the June lows. Until markets gain clarity on the terminal Fed interest rates and the US mid-term elections, markets can consolidate,” said Sharma.
Stocks at lower circuit
Bears are so strong that about 443 shares hit their lower circuit on Monday.
Kothari Products, Hardwyn, TRF, Creative Eye, DCM, PVP Ventures, Alps Industries, Shah Alloys, CL Educate, Deep Energy, Lasa Supergenerics, Vivimed Labs, Kohinoor Foods, VIP Clothing, Burnpur Cement, BL Kashyap, Arshiya, Hindustan Motors, and Rollatainers are among the stocks that hit lower circuit.
The ratio of 52-high and 52-week lows was largely equal on Monday, with 95 shares at 52-week highs and 87 at the lower circuit.
Stocks that touched 52-week lows included Alembic Pharma, Aurobindo Pharma, Biocon, Birlasoft, Dishman Carbogen Amcis, GAIL India, Gland Pharma, Globus Spirits, Hester Biosciences, Himatsingka Seide, HOEC, Indian Energy Exchange, Infosys, Intellect Design Arena, IOC, LIC, Mastek, Matrimony.com, Morepen Labs, Mphasis, Muthoot Finance, Natco Pharma, Oracle Financial, Piramal Enterprises, Persistent Systems, SIS, Sona Comstar, Suven Pharma, TCS, Voltas, Wipro and Zensar Technologies.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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Correction destroys Rs 18 lakh crore of investors’ wealth in last 9 days

 Bears seem to be ruling Dalal Street as the benchmark indices are not showing any sign of recovery, having fallen more than 6 percent from their recent mid-September high tracking weakness in global counterparts.

Fears of a global recession seem to be mounting in the wake of the aggressive policy tightening approach adopted by the US Federal Reserve to control inflation that came in at 8.3 percent for the 12 months to August. The Fed targets to bring inflation down to 2 percent even at the cost of economic pain.

Other central banks including the Bank of England followed suit by raising policy rates. Now the street is closely watching what happens at the Reserve Bank of India (RBI) which will release its statement on September 30.

Experts largely expect an increase of 25-35 basis points (bps) in its policy repo rate given expectations of cooling inflation worries with falling commodity prices, but they are also not ruling out a 50 bps hike if the RBI wants to echo the Fed’s hawkishness.

“Especially after the latest Fed meeting and associated growth worries, key commodity prices have halved from their peak. Inflation prints in the US and EU (European Union) are running at 400 percent above their target, whereas in India the divergence is only 16 percent above our upper band, and this gives the RBI room to maintain their focus on real growth and keep rates relatively capped,” said Divam Sharma, founder at Green Portfolio, a Delhi-based portfolio management services firm.

He expects rates to settle below the 6-percent mark in the medium term. The current repo rate is 5.40 percent.

The Nifty 50 was quoting at 17,052, down 275 points or 1.6 percent, and the BSE Sensex had fallen 815 points or 1.4 percent to 57,284 at the time of writing this article, dragged by most sectors barring IT.

The selling pressure mounted in the broader market as the BSE Midcap and Smallcap indices plunged around 3 percent each amid weakening market breadth. More than six shares declined for every share rising on the BSE.

Wealth erosion

With the consistent selling pressure, investors have seen nearly Rs 18 lakh crore of wealth eroded in the last nine days as the BSE market capitalisation tumbled from Rs 286.71 lakh crore to Rs 269.06 lakh crore at the open (at the time of writing this article).

Much of the wealth erosion was seen in the last four days, with more than Rs 14 lakh crore of wealth destroyed in four consecutive sessions (September 21-26).

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