WHAT LIES AHEAD : NEAR-TERM PICTURE
SPOT NIFTY : The Indian stock market, after gaining for three consecutive weeks, has sapped its three-week winning streak as Nifty has lost 1.50 per cent in the current week. The market had a decent outing in the first trading session of the week and it managed to close just above its 200-D SMA. However, it failed to build on the gains as global cues played spoilsport and, as a result, profit-booking was seen in the domestic markets. On the Wall Street, technology stocks were hit hard and, as a result, Nifty IT plunged about 4.40 per cent during the week.
The Nifty, after witnessing breakout of the two week’s consolidation range of 10,440-10,650, extended its upmove towards the level of 10,774, and pretty much on the expected line, faced resistance around the crucial 200-D SMA and near to the lower end of the bearish gap which was seen on October 4, 2018. After encountering resistance at the 200-D SMA, Nifty declined for the third consecutive day. Going ahead, the 200-D SMA is likely to continue to pose threat to any upmove that Nifty will attempt. On the downside, the zone of 10,440-10,480 is a crucial support zone, as manifold supports are positioned in this region. To begin with, the 200-D SMA is placed at 10,482, followed by the 38.2 per cent retracement level of the recent upmove, which being from October's low and the recent swing low of 10,440 which was seen on November 13, 2018. All things considered, we recommended adopting highly cautious approach as Nifty is very close to its downside support zone of 10,440-10,480 and a decisive breach below this level would be a delight for bears as it may open up for correction up to the level of 10,200 in the medium term. On the flip side, a fresh upmove is likely to occur after the Nifty moves past its important 200-DSMA. NIFTY DERIVATIVES: The Indian Volatility Index (VIX), a gauge for market’s short term expectation of volatility, decreased 1.28 per cent to 19.31. Nifty November 2018 future last price stood at 10518 at a discount of 8.75 points over the spot closing of 10,526.75. Nifty December 2018 future last price stood at 10,555.60 at a premium of 28.85 point over the spot closing of 10,526.75. The Nifty Put-Call Ratio (PCR) Open Interestwise stood at 1.27 for the November month contract.