WHAT LIES AHEAD : NEAR-TERM PICTURE
Indian benchmark indices witnessed a breather for the second straight week after more than 3 per cent correction from all-time high levels. Easing geopolitical tensions between North Korea and the
US had brought some buoyancy, but doubts over Trump’s administrative policies and delaying tax reforms washed off US equity gains and dragged the dollar down. Moreover, rising concerns over
India-China stand-off on Doklam issue too refrained markets from continuing with short covering. However, markets were saved from plunging further ahead of strong macroeconomic data expected to be released. The country expects GDP of 6.6 per cent in June quarter as compared to 6.1% in March. Moreover, the country also expects optimistic manufacturing and services PMI, in line with global bourses. All-in-all, the benchmark indices Nifty and Sensex are trading in consolidation mode with lack of momentum.
Broader markets remained a mixed bag considering movement since last Thursday. The mid-caps slightly recovered with 0.15 per cent gains while small-caps marginally fell by 0.4 per cent. IT remained the lead dragger and plunged over 4 per cent, led by a sharp 10 per cent plus fall in Infosys on the resignation of Vishal Sikka as the CEO. Power and auto sectors followed with 2.2 per cent and 1.1 per cent losses, respectively. On August 24, markets attempted recovery, driven by a sharp upside in pharma sector stocks. Overall, the market breadth remained positive with 847 advances and 648 declines.
Nifty has been consolidating on the weekly time frame keeping 9685 as the crucial support level for now. Nifty attempted short covering but resisted near to the 61.8 per cent retracement level of the downward move. On the daily time frame, Nifty has a strong upward sloping trendline support at 9760-9740. On the upside, we hold 9885 as immediate resistance, followed by 9950. Going forward, we need Nifty to break 10075-10150 on the upside to continue with positive trend. However, on the downside, Nifty may see a trend reversal if 9448-9445 is broken. The markets are likely to remain range-bound in the near term in the wake of diminishing volumes and 14-period RSI quoting at 49 level that suggests lack of momentum for now.