The Nifty 50 index pulled back by about 1% on Tuesday as investors eyed key corporate earnings by some of the biggest Indian companies. As a result, the index declined to 16,504 INR, which was lower than this week’s high of 16,717. Similarly, the Sensex index declined while the USD/INR pulled back ahead of the upcoming Fed decision.
India earnings season
The Nifty 50 index declined on Tuesday as investors reflected on the ongoing earnings season. On Sunday, Infosys reported a 6.8% revenue increase, which was better than the median estimate. In addition, it raised its forward guidance even as it warned about the rising cost of doing business and a slowdown in IT spending. However, its net profit declined to Rs 5,360 crore. The company’s CEO said:
We are investing in rapid talent expansion while ensuring rewarding careers for our employees to better serve evolving market opportunities. This has resulted in a strong performance in Q1 and the increase in FY23 revenue guidance.”
On Tuesday, companies like Tata Steel, Tech Mahindra, Axis Bank, Bajaj Fiserv, and Mahindra & Mahindra published their quarterly results. Most of these companies publish weak results, citing the rising cost of doing business. For example, Tata Steel reported a 21% decline in net profit, while Axis Bank reported a sharp increase in profit due to lower provisions for bad debt. Axis is the third biggest private sector lender in India.
The Nifty 50 index will also react to the upcoming interest rate decision by the Federal Reserve. Analysts expect that the bank will raise interest rates by about 0.75% and hint toward more hikes in the coming months. The Reserve Bank of India (RBI) will publish its decision next week.
Nifty 50 forecast
The four-hour chart shows that the Nifty 50 index has been in a strong bullish trend in the past few days. This rebound is in line with my previous forecast. Along the way, the index has formed an ascending channel that is shown in blue. It is now slightly below the upper side of this channel.
The index is slightly above the 25-day and 50-day moving averages, while the Relative Strength Index (RSI) has moved slightly below the overbought level. Therefore, the index will likely continue falling as sellers target the lower side of the channel at 16,200. It will then resume the bullish trend as long as it is above the two moving averages.
