Market turns tentative
Last week, the markets moved higher in the truncated trading week on the back of positive news flow. The Nifty managed to close above its 50-day SMA, which is a positive sign. However, the markets fell sharply on Friday following the resignation of Infosys CEO Vishal Sikka coupled with weak global cues. However, the Nifty managed to close above the 9800 mark. The FIIS remained net sellers in the cash segment but were seen hedging their positions as net buyers in the derivatives segment. The DIIS, however, remained net buyers during the week. The breadth of the market remained positive amidst low volumes, which indicates lack of confidence at higher levels. Crude oil prices remained subdued and traded between $48-52. The US markets, too, witnessed profit-booking and selling pressure along with other global markets on the back of geopolitical tensions arising out of North Korea. On the domestic front, the earnings season painted a mixed picture. Technically, the prevailing positive technical conditions helped the Nifty bounce back above its 50-day SMA. The Stochastic is placed above its average on the daily chart. Further, the Nifty is still placed above its 50-day SMA, 100-day SMA and 200-day SMA. The Nifty’s 50-day SMA is placed above its 100-day and 200-day SMA, its 100-day SMA is placed above its 200-day SMA indicating a ‘golden cross’ breakout. These positive technical conditions could lead to regular buying support at lower levels. However, the prevailing negative technical conditions still hold good. The MACD, KST and RSI are all placed below their respective averages on the daily and weekly charts. Further, the Stochastic is placed below its average on the weekly chart. These negative technical conditions could lead to selling pressure especially at higher levels. The -DI line is placed above the ADX line and the +DI line is also above 35, which indicates that the sellers are gaining strength. However, it has also come off its recent highs, which indicates that sellers are covering shorts regularly. The Nifty has closed around 9838, which is a positive sign. However, the market sentiment has turned tentative especially with management issues at Infosys, which is the biggest contributor to the benchmarks.
The buyback news on Infosys will be keenly watched.
Now, it is important that the Nifty moves and closes above the 9915 level for selling pressure to ease and to resume the uptrend and test the psychologically important 10000 level. If the Nifty fails to move and sustain above 9915, then further selling pressure may be witnessed and it could test the 9790 mark, where its 50-day SMA is placed.
Intermediate bouts of volatility and choppiness are likely to be witnessed.
In the meanwhile, the markets will take cues from the earnings season, Parliament session, global markets, Dollar-
Rupee exchange rate and crude oil prices.
Technically, the Sensex faces resistance at the 31610, 32273 and 32325 levels and seeks support at the 30921, 30680 and 29365 levels. The resistance levels for the Nifty are placed at 9838, 9915, 10000 and 10115 while its support levels are placed at 9790, 9638 and 9500.