The vacation-shortened week saw Sensex and Nifty continue their variety-bound movement. Indices fell on 3 of the 4 trading sessions this week and closed 2% down on a weekly basis. Now, S&P BSE Sensex sits at 47,878 even though the 50-stock NSE Nifty ended at 14,341. On the charts, Nifty has formed a doji or a higher wave-variety weekly candle, which is placed on the assistance of weekly 20 EMA about 14200 levels, stated Nagaraj Shetti, Technical Research Analyst, HDFC Securities. “The negative pattern like lower highs was seen on the weekly chart and Nifty is currently placed at the lower lows, as per week’s close. This is not a good sign,” he added.
What do the charts say?
Nifty’s movement in the week showed a lack of directional interest amongst the industry participants, stated Manish Shah, Founder, Niftytriggers. He added that searching at the candle formation of the last eight sessions, only two candles have been red and the balance six days have been green. “Fear is a bigger emotion than greed. And the lack of bear power to push Nifty lower is a testimony that long term investors are too bearish on the overall market,” Manisha Shah stated. According to him, Nifty could face instant resistance at 14,525-14,550 a break above this and count on an up move towards 14,700-14,775.
At this juncture, technical analysts have been citing 14,200 as the essential assistance for the Nifty index. A fall under the stated levels could outcome in additional correction for indices, forcing Nifty to discover 13,800-13,900 on the downside, stated Manish Hathiramani, Proprietary Index Trader and Technical Analyst, Deen Dayal Investments.
Covid-19 weighs down on Dalal Street
Fundamentally, the primary purpose for the downtrend on Dalal Street is the increasing circumstances of covid-19, according to analysts. The second wave is most likely to hit financial progression but the extent is nonetheless not identified. “While the fundamentals support a robust economy, it is too early to assess the potential damages, which is why even the markets have not reacted sharply so far,” stated Joseph Thomas, Head of Research, Emkay Wealth Management. “But the probability, of the resurgence of the pandemic impacting growth and therefore, earning, is quite high for the first two quarters of this year. These factors would continue to dominate the market in the coming weeks too,” he added.
Investors must watch for stock-precise trades amid the existing industry momentum. Although rating agencies have trimmed development forecasts, they nonetheless stay sturdy. Vinod Nair, Head of Research at Geojit Financial Services stated that vaccine drive and lockdown are invoking hopes of financial recovery in the close to future regardless of the weak industry trend. “Movement will be stock-specific based on Q4 results and dictated by developments on the covid spread, like falling infection rate,” he stated.
Looking at broader markets, analysts at Angel Broking stated that Bank Nifty is most likely to stay a significant laggard till the time it does not reclaim 32,500 – 33,000. They added that the positioning of the NIFTY Midcap 50 index is absolutely overlooked by the industry participants as the weekly charts show a ‘Lower Top Lower Bottom’ for the 1st time in this whole marathon rally began last April. These variables, according to Angel Broking, do not bode nicely for the bulls and therefore, one must continue to stay light on positions.