Street nervous on NBFC turmoil
The markets remained volatile last week moving in both directions. Global as well as domestic cues continued to influence market sentiment. Positive global cues like fall in crude oil prices and positive Q2 results helped the Nifty move above the 10500 mark. But profit-booking and lack of follow-up buying support at the higher levels erased all gains.
The FIIs continued to be net sellers in the cash segment but remained net buyers in the derivatives segment. Tthe DIIs continued to support the markets at lower levels and remained net buyers. The breadth of the market remained neutral amidst low volumes. On the global front, crude oil prices moved lower with Brent trading below $80/barrel. On the domestic front, the earnings season remained a mixed bag. Technically, the prevailing negative technical conditions weighed on the market sentiment. 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 daily chart. The Nifty is still placed below its 50-day SMA, 100-day SMA and 200-day
SMA. These negative technical conditions could lead to intermediate bouts of profit-booking and selling pressure, especially at the higher levels.
The prevailing positive technical conditions, however, still hold good. The Stochastic is placed above its average and has moved in the oversold territory on the weekly chart. Further, the Nifty’s 50-day SMA is placed above its 100-day SMA and 200-day SMA and its 100day SMA is placed above its 200-day SMA, indicating a ‘golden cross’ breakout. These positive technical conditions could lead to short-covering and follow-up buying support.
The -DI line is placed above the +DI line and the ADX line and above 35. But it has come off its recent highs, which indicates that the sellers are covering shorts. The ADX line is placed above 43. The Nifty has failed to sustain above 10400, which does not augur well for the markets.
It is important for the Nifty to respect the 10200 level.
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If the Nifty slips below 10200, the selling pressure could intensify and it could test 10000. On the upside, 10400 remains a strong resistance level. The market sentiment remains nervous and weak. Regular buying support along with positive news flow is needed for the markets to come out of the current turmoil. Meanwhile, the markets will take cues from the earnings season, DollarRupee exchange rate, global markets and crude oil prices. Technically, the Sensex faces resistance at the 34344, 34937, 35322, 36350, 37165, 37630, 38250, 38761 and 38989 levels and seeks support at the 33723, 32972 and 32483 levels. The resistance levels for the Nifty are placed at 10283, 10340, 10419 and 10589 while its support levels are placed at 10200, 10000, 9958, 9827 and 9735.