Sensex can drop to 58,000, Nifty 17,700 if these supports are violated

Presently, the BSE Sensex and Nifty 50 have breached their respecitve 21-SMAs, the following support levels need to be honoured in order to sustain a positive bias.

The US Fed rate hike coupled with a continued hawkish stance on future rate hikes and growth expectations has triggered a fresh round of selling in global markets. To add to the woes, ECB and Bank of England, too, raised interest rates y 50 bps on Thursday.

The Federal Reserve slowed the pace at which it started the interest rate hike since this June; with 75 bps raised each time in last four meetings to 50 basis points in recent meet. However, Fed raised it terminal rate expectation to 5.1 per cent for 2023 as against 4.6 per cent projected at the end of September meeting.

In the last two trading sessions post the US Fed 50-bps rate hike, the benchmark indices in the US - Dow Jones, S&P 500 and Nasdaq have tumbled in the range of 3- 4 per cent.
 

Back home, domestic markets, too, witnessed similar trend. The BSE Sensex and Nifty 50 witnessed one of the worst single-day fall since October. On Thursday, BSE Sensex tumbled 1.40 per cent or 878 points to close at 61,799 and Nifty 50 fell 1.32 per cent or 245 points to end at 18,414.

This morning, the bias remains slippery, with the Sensex testing 61,500 level, and Nifty 50 near about 18,300.

Going ahead, here’s an outlook on the benchmark indices amid this backdrop:-

S&P BSE SENSEX

Outlook: Support at 61,000

The BSE Sensex is presently struggling to overcome the selling pressure emerging above 62,900 level, as per the daily chart. This inability has led the index to lose strength, inevitably denting the upward bias, and now falling beneath the key cushion of 21-simple moving average (SMA) set at 62,285. 

Technically, if the index stays beneath this support average for two sessions in a row, the trend would see downward pressure or remain sideways until the selling pressure is absorbed.

Additionally, as long as the index honours the support of 61,000 on a closing basis, the trend may find some respite near the same. However, in case the index negates this support, it can slip all the way to 58,000 level. CLICK HERE FOR THE CHART

NIFTY50

Outlook: Support at 18,100

Post witnessing profit booking close to the 18,900-mark, the index saw a healthy decline to 18,345. Thereafter, positive reversals failed to cross the 18,700 level, indicating a frail sentiment.  The Nifty 50 has slipped below the 21-SMA set at 18,525 and a consecutive close below the same could further erode the positive momentum. 

The next support for the index comes at 18,100-mark, which must to be held on a closing basis. A breach of the same could signal a slide towards 17,800-17,700 levels. CLICK HERE FOR THE CHART

NIFTYBANK

Outlook: Breach of SMA-21 could mean a short-term decline

Since early October this year, the Nifty Bank index has risen vertically, with every decline being accumulated exhibitng a robust outlook. Thus far, the index has been positively guided by the 21-SMA, which unwaveringly served as the support. The 20-SMA now stands at 43,190, a breach of this level would mean short-term decline for the index. Following supports are seen at 42,700 and 42,500 levels.  CLICK HERE FOR THE CHART