Time Correction On The Cards As Nifty Enters Range Bound Phase
January ’22 marked a volatile month for domestic equities, with fears of Omicron looming large at the start of the year. Though fears regarding the latest COVID variant have since been allayed to an extent, a variety of factors have muted the blockbuster rally that began in 2020.
The Fed’s hawkish comments pointed to a sooner than expected monetary tightening that may result in a near term flight of foreign capital from domestic equities. Powell, in his post policy conference, said that the strong labour market and multi decade high inflation trends meant that there was plenty of room for raising interest rates.
Besides this, the absence of blockbuster earnings surprises, geopolitical tensions between Ukraine and Russia, and crude topping $90 were all factors that spooked the markets, resulting in a few panic selling sessions towards the end of the month.
This “risk off” attitude that appears to be brewing was reflected in the sharp selloff in most of the high risk tech IPO’s such as Paytm, PB Fintech and even the new darling of the bourses, Nykaa. The XIX crossing 20 and remaining there further corroborates the fact that risk appetite appears to be declining.
The shape and slant of the Bollinger Band on the weekly charts indicates that we may well be entering a period of consolidation now. We will likely see the index remaining range bound between 16,500 and 18,000 in the immediate foreseeable future. A time correction appear to be o the cards; and it may be an extended one.
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