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FII's selling continued amid rise in US Dollar index and bond yields that weighed on market sentiment
Nifty extended losses and settled 2.5% lower at 23530 for the week as FII's selling continued amid rise in US Dollar index and bond yields that weighed on market sentiment. Broader market relatively underperformed as Nifty midcap, small cap closed 4% lower
All Major indices including Nifty, Bank Nifty, Midcap, Small Cap have approached their 200 days EMA amid oversold conditions. Over past two years, on multiple occasions, mean reversion towards 200 days EMA resulted into technical pullback
What to expect: Amidst ongoing volatility supportive efforts can be seen around 23200-22900 zone as it is 52 weeks EMA coincided with election outcome day high. Meanwhile, for a meaningful pullback to materialise, index need to decisively close above previous sessions high which has been missing in recent past
Breadth: % of stocks above 50 days SMA has approached bearish extreme level of 12. Since covid lows, such an extreme reading leads to durable bottom over medium term
Brent on verge of breakdown: Pullbacks in Brent prices were short lived amid slowdown in demand and possible rise in production. A decisive close below 69 would result into extended correction towards 60 mark going ahead
Sectorally, IT, pharma, BSFI expected to relatively perform better. PSU banks appear oversold technically and are poised for a bounce back
Structurally, since covid lows, average intermediate bull market corrections have been to the tune of 10% in Nifty and 9% in Bank Nifty. With 10% correction in Nifty and 8% correction Bank Nifty is already in place with positive divergence in Bank Nifty, we believe downside remains limited with key support in the range of 23200-22900.
Disclaimer – I ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025, India, Tel No : 022 - 6807 7100. I-Sec is acting as a distributor to solicit bond related products. All disputes with respect to the distribution activity, would not have access to Exchange investor redressal forum or Arbitration mechanism. The contents herein above shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein mentioned are solely for informational and educational purpose.
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