This week’s rally came on the back of short covering in index heavyweights like
, , , and , which weigh around 33 per cent in Nifty. was the party spoiler which lost 3.5 per cent this week.
Rahul Shah, Co-Head of Research at Equitymaster, said the pullback in Indian indices this week seems more like a relief rally than a full-fledged recovery as global macros continue to remain challenging and may continue to act as a drag on Indian stocks as well.
On the weekly chart, the Nifty formed a bullish harami pattern, suggesting a bullish reversal. Technical analysts say the trend may remain bullish in the short term. On the higher end, the Nifty may move towards the 15,800-16,000 zone while support is visible at 15,500.
As we step into the monthly expiry week, analysts expect volatility to increase.
“The recent fall in Sensex ended at the support of long-term trendline from the high of 2008. Additionally, the 100 WEMA (Weekly Exponential Moving Average) acted as support near the trendline.
Nifty and Sensex are likely to continue their bullish momentum next week towards 15,935 and 53,500 levels,” Brijesh Bhatia, Senior Research Analyst, Equitymaster, told ETMarkets.
Siddhartha Khemka of
said concerns of global recession, monetary tightening as well as depreciating rupee would keep the upside limited. “We expect market volatility to continue next week with Nifty approaching its strong resistance around the 16,000 mark,” he said.
In consolidation mode after last week’s sharp decline, the market is awaiting fresh triggers. Crude movement and easing of the geopolitical situation will remain on the top of investors’ radar.
Globally, investors will keenly analyze the US quarterly GDP growth rate numbers. The USA would officially enter into a recession if they post a negative growth and thus, this could have a spill-over effect on global markets, said
Yesha Shah, Head of Equity Research, Samco Securities.
“Investors are therefore advised to accumulate good stocks with strong fundamentals, free cash flows, and lower leverage over the long run while disregarding short-term difficulties,” she said.
A technical analysis by domestic brokerage firm
shows that the reading of the percentage of stocks above their 200-DMA below 15 signifies extreme pessimism in the market that eventually leads to a technical pullback to the tune of a minimum 10 per cent in the subsequent three months. It expects Nifty to stage a technical pullback towards the 16,600 mark in the next few months.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)