Market Wrap: Market sees huge dip ahead of Fed meet, Union Budget 2023. What’s in store for next week

It was a tough week of trade for Indian equity benchmarks where frontline indices plunge over two percentage points as investors remained cautious ahead of Federal Open Market Committee (FOMC) meeting and Union Budget 2023-24 to be held next week. Selling in the final two days of the week mainly were the low points for the markets. On Friday, Indian stock indices plummeted sharply during the day’s trade largely due to a significant decline in banking, financial, metal, and oil and gas indices.
A major sell-off in Adani group stocks was triggered after a report from Hindenburg Research dampened the market sentiments.
Besides, a United Nations report said that global economic growth is projected to slow to 1.9 per cent this year, which is much lower than what was estimated before, 3 per cent.
The report blamed the Covid-19 pandemic, the Ukraine-Russia war, high inflation, and the climate crisis for the overall slowdown. It said this would mark one of the lowest growth rates in recent decades. These signals led the BSE Sensex to decline 1,291 points, or 2.1 per cent, at 59,330.90 during the week ended January 27, while the Nifty slipped 423 points, or 2.3 per cent, to 17,604.30.

Market watcher Devarsh Vakil, Deputy Head Retail Research at HDFC Securities, said: “Indian benchmark equity gauges Sensex and Nifty hit their over three-month lows on Friday, dragged by massive selling of Adani group and banking stocks. It was mayhem on Dalal Street for the second day in a row, with today’s fall being sharper than the one seen on Thursday. Adani shares were in the line of the fire after the Hindenburg report accused the Adani group of serious irregularities.  Eight listed companies of the Adani conglomerate lost more than Rs 3 lakh crore market capitalisation on Friday.”

“At close, Nifty was down by 288 points or 1.61% at 17604. Volumes on the NSE were sharply higher as compared to recent averages. Nifty breached its 200 DEMA support of 17750 in the intraday session. Nifty has closed below the crucial support of 17761, which happened to be the multiple bottom support in the last 6 weeks. Now from here, previous support of 17761 is expected to interchange its role as a short-term resistance.  Above 17761, resistance for Nifty is seen at 18000. Below 17493, Nifty could extend its fall towards the next support of 17350.” he added.

As many as 15 stocks in the Nifty 50 index delivered a positive return for investors in the week ending January 27, 2023. With a gain of 10.5 per cent, Tata Motors emerged as the top gainer in the index. It was followed by Bajaj Auto (up 10.2 per cent), Maruti Suzuki India (up 3.4 per cent), ITC (up 3.3 per cent) and Hindustan Unilever (up 2.5 per cent). Tata Consultancy Services and Britannia Industries also advanced over 1.5 per cent. On the other hand, Adani Ports and Special Economic Zone, Shree Cement and State Bank of India declined 22.7 per cent, 10.3 per cent and 8.8 per cent, respectively.

Sector-wise, the BSE Auto index gained the most (2.8 per cent) during the week gone by. BSE Fast Moving Consumer Goods has also given a 0.9 per cent return. While on the down side BSE Power, BSE Oil & Gas and BSE Bankex indices have registered a weekly decline of 10.4 per cent, 7.2 per cent and 5.1 per cent, respectively.
Kunal Shah, Senior Technical Analyst at LKP Securities, said: “Bank Nifty had fallen below the critical support level of 41800, leading to a quick drop towards 40000. Besides, the index has sustained below the crucial moving average 50 EMA. The RSI is in a bearish crossover and falling. Over the short term, the index may remain under selling pressure. On the lower end, support is visible at 40,000; whereas on the higher end, resistance is visible at 40,800.”