US Fed policy crucial for charting market direction next week; 17200 important resistance: Kunal Shah

In an interview with ETMarkets, Shah said: “The Nifty resistance is visible at 17200 and as long as this level is not surpassed on the closing basis the index remains in a sell-on-rise mode,” Edited excerpts:

What a week for Indian markets dominated by global cues. The Nifty50 is still trading below Budget Day lows. What led to the price action?
The global scenario played a major role in the correction of Indian equities. The FII data to date has been negative wherein they have sold more than 50000 crore in the cash market.

After a steep fall seen in the week gone by, where do you see markets heading in the coming week? Major levels to watch out for?
The market will continue to remain volatile in the coming week as well. With the US Fed policy scheduled for next week, the market participant will wait to forward commentary.

The Nifty resistance is visible at 17200 and as long as this level is not surpassed on the closing basis the index remains in a sell-on-rise mode. The Bank nifty index too faces stiff resistance at the 40000 mark.

Any triggers which traders should watch out for?
Traders should watch for the US Fed policy which is scheduled next week. Post that the market will take a clear direction.

In terms of sectors, banking stocks fell the most. What led to the price action? Is it the global contagion fears that led to a fall in banking stocks?
Financial stocks remain under pressure because of the negative global outlook. The SVB scam affected the banking stocks not only in India but across the globe.

Mid & Smallcap stocks also suffered deep cuts – how should one play the broader theme in the coming week?
The Nifty midcap index is trading around the critical support zone of 29500 and if this support is not held on the closing basis it will lead to further selling pressure on the downside. One should have a very stock-specific and sector-specific approach in such volatile markets.

Any value pick which traders can buy after a steep fall in the markets?
PSU banks have corrected a lot and have become attractive at this value. The Nifty PSU bank index is also trading at a crucial support of 3500 from where multiple bounces have occurred.

SBI, Canara Bank, and Bank of Baroda all three look attractive at the current levels.

SBIN: SUPPORT: 510, CNABK: SUPPORT: 270, BOB: 150

Things that traders should avoid doing after a steep fall in markets even if their stop losses got hit
Manage their risk properly by being very stock-specific and sector-specific. Identify the leaders of the next bull market. Position sizing is a very important trade with limited quantity in the volatile market.

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