Weekly Market Outlook for 23 October to 27 October

In the week gone by, Nifty witnessed resistance around 19850 and corrected on back of negative global cues. While the benchmark indices sold off during mid-week, stock specific selling pressure was seen in the last trading session. Both Nifty as well as Bank Nifty indices corrected by over a percent during the week.

Nifty Today:

Nifty initially recovered from the swing low of 19333 in the first half of the October month. However, we did not see any fresh long positions in this upmove and even the short positions by the stronger hands were not covered. The index faced resistance around the 61.8 percent retracement of the previous correction which was around 19880, and it corrected from this hurdle led by negative global cues. The short positions of FIIs are still intact as more than 70 percent of their positions are on the short side and they have not covered many positions. The RSI oscillator in Nifty and Bank Nifty has given a negative crossover on the daily charts which indicates a weakening momentum. In the coming week, 19480 will be seen as the immediate support as the swing low at this level coincides with the open interest base in Nifty placed at 19500 put option. If the index breaks this support, then we could see a sell-off in the expiry week towards 19380 and 19330. This month’s low at 19330 remains a crucial support which if broken, then we could see an extension of this correction towards 19000-18900 in the short term. The index now needs to surpass the crucial hurdle of 19850 for a resumption of this uptrend. Until the index surpasses this hurdle or the data does not hint at any optimism, traders are advised to stay cautious for a while.

Negative global cues led to selling pressure in Indian markets

The Nifty Midcap index has seen a consolidation phase in last one month which seemed to be a time-wise correction within an uptrend. However, we witnessed decent selling pressure in broader markets on Friday and if the Nifty Midcap 100 index breaks the support of 39600, then it could lead to a short term price wise corrective phase as well in the midcap space.     

Nifty, Bank Nifty Levels and  FINNIFTY Levels: