Trends on SGX Nifty indicate gap-down opening for stock market indices

Trends on SGX Nifty indicate a gap-down opening for the stock market indices. The Indian markets could open sharply lower in line with negative Asian markets today, said Deepak Jasani, Head-Retail Research, HDFC Securities.

Mirroring the fall in SGX Nifty, key benchmark indices are seen trading in rough waters amid Russia-Ukraine tensions and the Fed's hawkishness which is still reverberating negative sentiments, said Prashanth Tapse, Vice President (Research), Mehta Equities Ltd. Overnight, MOEX Russia Index slumped as much as 14 percent after Russian President Vladimir Putin said he’s considering an appeal for official recognition from separatists in east Ukraine. Amidst this backdrop, Nifty’s resistance is at 17,421 mark and expect waterfall of selling below 17,057 mark.

Nifty slipped down from day’s high of 17,350 and closed in red losing 0.40 percent on February 21. Nifty may continue this choppy or negative trend as broader indices also indicate some weaknes, said Mohit Nigam, Head - PMS, Hem Securities .Russian Index fell more than 12 percent during the trading session as tension between Russia and Ukraine increases which may impact Indian markets as well. Investors should maintain caution in the market for few upcoming trading sessions.

On technical front, immediate support and resistance levels for Nifty50 is 17,200 and 17,400 respectively and for Bank Nifty 37,200 and 38,150 level will act as support and resistance, Nigam added.

Nifty fell for the fourth consecutive session on February 21 after a volatile day. At close, Nifty was down 0.40 percent or 69.7 points at 17,206.6.

Nifty has formed lower tops – lower bottoms over the near term, though the day on day loss has not been large. Advance decline ratio continues to be deeply negative, said Jasani. 16998-17381 could be the band for the Nifty in the near-term.

Sebi approval to 3 IPOs

In spite of all ups and downs in the broader market, strong momentum is seen in India’s IPO market as three companies got SEBI’s approval namely – API Holdings Ltd, the parent company of PharmEasy, Wellness Forever Medicare Ltd and CMR Green Technologies Ltd.

Asian shares down

Shares in Asia-Pacific declined in Tuesday morning trade as tensions surrounding Russia and Ukraine continue to keep investors on edge.

MSCI's broadest index of Asia Pacific shares outside Japan skidded 1.44 percent, dragged down by markets in Hong Kong and mainland China, according to Reuters. Japan's Nikkei shed 2 percent. S&P 500 futures fell 1.5 percent, Nasdaq futures lost 2.2 percent, and the Russian rouble briefly touched an 18-month low in early Asia trade on Tuesday, after Russia's MOEX equity index had fallen 10.5 percent the day before.

Hong Kong-listed Chinese tech stocks fell 2.25 percent, with heavyweights Tencent and Alibaba both hit by speculation about a new wave of regulatory scrutiny.

European markets close lower

European markets closed lower on Monday as investors monitored the Russia-Ukraine situation and unexpectedly strong economic data from the euro zone and UK. The pan-European Stoxx 600 index provisionally closed down 1.4 percent. UK’s composite PMI came in at an eight-month high of 60.2 in February, up from 54.2 in January and well above forecasts. IHS Markit’s flash euro area composite PMI (purchasing managers’ index) reading came in at a five-month high of 55.8 in February despite record rises in consumer prices.

US stock-index futures were headed sharply lower Monday evening as Russian President Vladimir Putin ordered the deployment of troops to two separatist areas within Ukraine, after recognizing their independence, a move that some fear puts Ukraine and Russia one step closer to military conflict. Putin described Ukraine as an integral part of Russia's history, with eastern Ukraine made up of ancient Russian lands. It was not immediately clear whether the Russian military action would be regarded by the West as the start of a full-scale invasion.

US markets closed on Monday

Markets in the US were closed in observance of Presidents Day and trade on Tuesday will provide the first opportunity for investors to react to developments in Eastern Europe.

West Texas Intermediate crude for March delivery was trading $2.38, or 2.6 percent, to reach around $92.60 a barrel. Gold prices on Globex were up 0.6 percent, to around $1,912.10 an ounce

The White House issued an executive order restricting investment and trade in those regions, while additional measures — likely sanctions — were expected to be announced Tuesday.

India’s monsoon, which irrigates more than half of the country’s farmland and is critical for economic growth, is likely to be normal this year, according to private forecaster Skymet Weather Services Pvt. This could mark a fourth straight year of normal monsoon.

Crude, gold up

Brent crude futures rose 2 percent to $97.21, touching a new seven-year high on worries Russia's energy exports could get disrupted. Oil prices rose as the Ukraine news exacerbated existing supply concerns that have pushed prices near $100 a barrel. The S&P energy sector has been by far the best performer in 2022, up nearly 22 percent, and one of only two S&P sectors that are positive on the year, Reuters said.

Spot gold hit a new six-month top of $1,911.56.

USD-INR Outlook

On February 21, USDINR spot made a gap down opening at 74.50 levels from its previous closing of 74.66 levels. From thereon, it plunged towards 74.35 levels on back of suspected IPO related inflows into the system. However, opportunistic dollar buying by importers as the geo—political risks still lingers pushed the USD-INR spot higher towards the end. In the upcoming session, USD-INR spot is likely to go further lower towards 74.20 levels as markers gear up for LIC IPO. Further, down the line, a meeting between Russia and US foreign ministers is expected this week – a probable ray of hope for the markets.

F&O ban

Escorts, and Punjab National Bank are under the F&O ban on the NSE today (February 22).

(With additional inputs from Reuters)

Published on: Tuesday, February 22, 2022, 08:29 AM IST