Weekly Market Outlook for 3 October to 6 October

The last week of September turned out to be volatile as the markets corrected during the monthly expiry to test the 19500 mark. We witnessed a strong recovery in Friday’s session, and the index finally ended the week above 19600, with marginally weekly loss.

Nifty Today:

Our markets entered a corrective phase post mid-September and the correction in last couple of weeks was mainly due to weakness in global markets, leading to selling by FIIs in the cash segment and formation of short positions in the index futures as well. FII’s have rolled over short positions in the index futures with 70 percent of the outstanding positions on the short side. Even if we look at the options data, 19800 call have the highest open interest in the weekly series. Hence, the data remains cautious and either a short covering by the FIIs or unwinding of call writing positions will lead to a change in stance. So according to the data, one should be cautious on the market and avoid aggressive trades. The immediate support for Nifty is placed around 19500 followed by 19435. Now although the data is negative, the overall market breadth is healthy indicating a lot of stock specific positive momentum in the broader markets. The Nifty Midcap 100 has not yet closed below its 20 DEMA support since the last six months and the index still hovers above this support which is placed around 40000.

Short rollovers by FIIs; 19800 now seen as crucial hurdle 

Till this is intact, the broader market trend remains positive. In case the midcap index breaks this support, then we could see profit booking in the broader markets as well and hence, traders are advised to keep a close watch on the same.

Nifty, Bank Nifty Levels and  FINNIFTY Levels: