BackAfter a week of banking tumult, now focus is on Fed meeting minutes
Investors' confidence was negatively impacted by the turbulence in the US banking industry caused by Silicon Valley Bank's (SVB) bankruptcy and the closure of New York's Signature Bank
PremiumThe Indian equity market has shown a strong rally in the last hour of Friday's trading session and successfully closed above their important levels. The Nifty and Banknifty traded simultaneously in the last hour, while the US market showed some weakness on Friday.
Investors' confidence was negatively impacted by the turbulence in the US banking industry caused by Silicon Valley Bank's (SVB) bankruptcy and the closure of New York's Signature Bank. Global markets are in brittle mode because everyone is eyeing the outcome of the upcoming US FOMC meeting, which is scheduled for March 22, 2023. US 2-year bond yields are also cooling off, from 5.08% to 3.84%. Apart from this, the Japanese inflation rate for February will be announced on March 24, 2023.
Technically, Nifty has formed a downward-sloping channel by connecting the lower highs and lower lows formations. After five days of selling, it took support from the lower end of the channel and formed a doji candlestick formation, and it respected that level on Friday trading, closing above 17100 levels. If Nifty manages to hold these levels, then there is scope for a short-covering rally towards the 17250 and 17440 levels. On the downside, 17000 will be the first support level, while 16800 is a critical support level.
Banknifty also formed a kind of spinning bottom candlestick formation near the important support level of 38700 and managed to sustain above the 39400 level. Now we can expect a short-covering move towards the 40000 and 40500 levels. On the downside, 38700–38500 is a strong demand zone.
If we look at the derivative data, FII net short exposure in index futures is at its highest level ever at 90% (1.71 lakh contracts), while in March 2020 (Covid) it was around 1.60 lakh contracts. The put-call ratio is at a 0.88 level. Overall, derivative data is negative but extremely oversold.
Domestic and global cues will influence the global markets. Crude oil and the rupee will also play an important role in market movement. FIIs and DIIs will be watched.
The author, Pravesh Gour is Senior Technical Analyst at Swastika Investmart Ltd
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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