Week Ahead

Volatile markets closed lower the week ended September 23 following weak global cues, as rising fears of a recession due to aggressive policy tightening by the US Federal Reserve (the Fed), along with fresh escalation of tensions between Russia and Ukraine, dented sentiment.

Benchmark indices remained under pressure for the second consecutive session, with the BSE Sensex falling 742 points, or 1.26 percent, to 58,099, and the Nifty 50 declining more than 200 points, or 1.16 percent, to 17,327, dragged down by most sectors barring auto and FMCG.

We expect volatility to remain high as we have important events like the Reserve Bank of India (RBI) Monetary Policy Committee's (MPC) policy review meeting, and monthly derivatives expiry, scheduled during the week. Besides, prevailing pressure in global indices will continue to weigh on the sentiment.

Technically Nifty 50 has seen the formation of a bearish candlestick pattern on the daily (on Friday) as well as weekly charts, after breaking down strong support at 17,400-17,500 levels.

There was also a breakdown of the gap-up area of August 30, and of the 50-day exponential moving average (17,358). Hence, given the weak environment, the index may break its August lows at around 17,150 levels, followed by the 17,000 mark, in the coming days. The upside hurdle is expected to remain at 17,700-17,800 levels if there is a recovery.