Where will Sensex, Nifty seek support after Manic Monday?

With the consumer price inflation coming in hotter than expected in the US, at 8.6% annually, market concerns have resurfaced that action from the Federal Reserve and other central banks could risk tipping the economy into recession.

The fears resonated in the markets yesterday as equities crashed, emerging markets’ currencies hit fresh lows, while bond yields rose world over. 
 

Back home, too, stock markets cracked heavily with the S&P BSE Sensex dropping 1,457 points to end below 53,000 level. The Nifty50, meanwhile, tanked 427 points to give up 15,800. 

The Nifty Bank index, also, dropped over 1,000 points to settle near 33,400.

Investors now fear that inflationary concerns have broadened in the US, going beyond the known drivers such as supply chain bottlenecks and energy shocks. 

Back home, market participants are worried that India’s sticky retail inflation in May could turn the Reserve Bank of India even more hawkish.  

Going forward, experts see a hazy near-term trajectory.

Gaurang Shah, Head Investment Strategist, Geojit Financial Services, rate hikes by US Fed, RBI already dicounted. However, exit of FIIs, global sell-off are sore points and downtrend in markets may persist in near-term.

Technical charts, too, indicate around 2% downside potential in benchmarks as they hover around crucial support levels after Monday’s mayhem.

Avdhut Bagkar of Business Standard said Sensex, Nifty may seek support at 100-WMA, near-term support at Sensex 51,249 and Nifty 15,318. Nifty Bank, too, lingering around 100-WMA (33,100) and Nifty IT can fall another 3-4% if it fails to hold 100-WMA.

Against this backdrop, Tuesday’s market session will be guided by global cues, trajectory of bond yields and rupee, crude oil prices, and India's retail and wholesale inflation data.