WHAT LIES AHEAD : NEAR-TERM PICTURE
An abrupt inclination of investors towards commodities, specifically the crude oil, dragged Indian equities southwards. Anti-corruption drive in Saudi Arabia led to a provisional but rise in oil prices to record levels. Further, investors remained wary of the China trade data, which later turned out to be positive for the markets across the world. Mixed corporate earnings reports too confused the market sentiments, which finally led to a sharp correction in the Indian equities after consolidating for three consecutive days. All-in-all it was profitbooking by investors who had entered smartly post the demonetisation downfall and had bought scrips at big discounts.
During the week since last Thursday, barring IT that played a defensive role by surging 3.5 per cent, all other sectors ended in the red. Realty, power and metal bled the most, with losses of 2 per cent and more. Broader indices, viz Mid-cap and Small-cap too tumbled and fell 0.9 per cent 0.8 per cent, respectively, weakening the overall market breadth during the period.
Nifty50 index, after scaling to an all-time high levels of 10,490.45 as on November 6, 2017, formed a sizable bear candle on November 7, 2017, which overshadowed previous three days' candles. On Wednesday, follow-through selling was seen and the index snapped its sequence of higher highs/higher lows of the last five weeks as it closed below the previous week’s low of 10,323. On Thursday, despite opening with a gap-up, Nifty failed to hold on to its gains and slipped lower and in the mid-afternoon session, Nifty slipped below the 10,300-mark on an intra-day basis. However, it took support near to its 21-day EMA and recouped some of the losses to end above 10,300-mark. In the coming trading sessions, the levels of 10,380-10,400 are likely to act as a stiff resistance levels for the Nifty. On the other hand, major supports for Nifty are seen at levels of 10,240-10,260, and a follow-through move below these levels could open further gates for correction up to the levels of 10,200 and 10,140. Failure to do so will result in a consolidation in the range of 10,260-10,400.
LEGEND : EMA – Exponential Moving Average.
MACD – Moving Average Convergence Divergence
RSI – Relative Strength Index