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Nifty 50 index sell-off relieves however beware of a dead cat bounce


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The Nifty 50 index has actually not been left in the continuous worldwide stock sell-off. The closely-watched index of blue-chip Indian business was trading at ₹17,085 on Friday, ~9.5% listed below the greatest level this year. The index is hovering near the most affordable level because October 17.

Indian stocks sell-off continues

The Nifty 50 index, like other worldwide indices, has actually continued falling as regulators hurry to include the banking sector. On Wednesday, Swiss regulators offered liquidity worth over $50 billion to Credit Suisse. 

And on Thursday, a group of banks like Goldman Sachs and JP Morgan revealed that they were transferring $30 billion to First Republic Bank (FRC). The step was collaborated by Janet Yellen, the Treasury Secretary.

Before that, regulators, consisting of the Federal Reserve, revealed that they were backstopping all depositors in Silicon Valley Bank and Signature Bank. 

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The down pattern in worldwide stocks has actually likewise struck Nifty 50 banks also. However, the sell-off in these companies has been a bit contained compared to their American and European peers. ICICI share price has dropped by over 5.8% from the highest point this month. 

Similarly, banks like Kotak Mahindra, SBI, and Axis Bank have dropped by single digits in the past few days. In contrast, British banks like Lloyds, Barclays, and HSBC share prices have dropped by over 10% in the past few days. 

This performance is likely because Indian banks are more divorced from their global peers. Most importantly, these banks had little exposure to the key banks at risk, including SVB and Signature, 

The top-performing Nifty 50 index constituents in the past five days were Bharat Petroleum, Tech Mahindra, Titan Company, and Larsen & Toubro. On the other hand, the worst performers in this period are firms like IndusInd Bank, Mahindra & Mahindra, Tata Consultancy, and Bharti Airtel.

Nifty 50 index forecast

Nifty 50
Nifty 50 Index Sell-Off Relieves However Beware Of A Dead Cat Bounce 3
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Nifty chart by TradingView

The Nifty 50 index has been in a bearish pattern in the past few months. In this period, it has actually moved to the 50% Fibonacci Retracement level on the 4H chart. The index has actually moved below the 25-day and 50-day exponential moving averages.

Most importantly, the index has formed a descending channel shown in blue. This rate is slightly above the lower side of the channel. Therefore, there is a likelihood that the Nifty will rebound to the 38.2% retracement level of ₹17,480. However, a drop listed below the lower side of the channel at ₹16,858 will revoke the bullish view.

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