Weekly Market Outlook for 29 January to 02 February

Our markets corrected in the truncated week gone by where the pullback move witnessed selling pressure. The heavyweights from the IT and Private sector banking dragged the benchmark lower and Nifty ended around 21350 with a loss of over a percent.

Nifty Today:

In the January series, Nifty registered a new all-time high of 22124 around mid of the month, but it corrected sharply in last couple of weeks. The main reason for this correction has been the selling by the FII’s who have sold equities worth over 33000 crores in this month so far and had also formed short positions in the later part of the series. Technically, the index has formed a ‘Lower Top Lower Bottom’ structure which has weakened the near term trend. Although, the longer term trend still remains firm and this down move seems to be a correction within an uptrend. The index has ended above the ’40 DEMA’ support which is in the range of 21250-21200. In last three trading sessions, the index did break this during intraday, but it has managed to close above the same these days. Thus, this would be seen as an important support zone for the coming week (on a closing basis). If this support remains intact, then an up move could be expected during the coming week as the RSI readings on the hourly charts are showing signs of a pullback from the oversold zone. In case of such a move, 21550-21600 will be the initial range to watch which will be the resistance. On the other hand, a break below 21200 on a closing basis could drag the index lower towards 21000-20900 range. 

                                IT and Banking heavyweights led to correction in the benchmark indices

Traders are still advised to stay cautious from a trading perspective and look to lighten up longs on up moves. At the start of the new series, it will be important to see how new positions are formed in the derivatives segment and thus, traders should be watchful of the data and trade accordingly.

Nifty, Bank Nifty Levels and  FINNIFTY Levels: