Markets ended 2% down from previous weekly close. The 2 weeks leading to September ending have not thrown up good signals. Sentiment has gone for a toss. Weakness continues across the markets. No one has to guts to buy the dips. Nifty is down 3-4% from it’s all time highs. Sensex perhaps never made a significant top. Divergence has been magnified all across the places. Expiry week lived up to its expectations.
Technically speaking. Nifty is in a bad shape. 9900 is the crucial first level it needs to cross to stem the sell on rallies strategy. 9883 being the daily chart 50 day EMA should be reclaimed. On the positive note, 9685 was the key level from where the Nifty bounced to reclaim the top. This was August 2017. In the recent downturn the markets reversed from 9687. However Nifty is not decisively safe as it’s just 1% away from its low. This can be categorized as a dead cat bounce and not a buying spree.
Fundamentally speaking, multiples are still stretched. Nothing has changed substantially. FII selling is relentless. DII buying is relentless. Time will tell who has the last laugh. History tells us its going to be FIIs. Economy is struggling – mixed data points, noise of a political instability, doubts being cast on the ability of the incumbent government are weighing down. With the Q2 FY17 closed, all eyes will be on the results season which will kick-start soon. This seems to be the deal breaker quarter.
Globally, Korea v/s the world noise seems to have lowered as bit. As of now. Dow is stable and so are global markets supported by lack of negative triggers and bundle of liquidity. Commodity space is seeing some traction as Crude is having one of the best runs in recent times.
Sector watch – keep and eye on Metals. As a space they seem to look strong. If the recent lows hold, Nifty Metal should be on its way to make a new high. Watch out for Auto Index and stocks. Given a robust performance they would show good positive traction. Nifty Bank is looking tricky. A breach of previous lows will accelerate momentum on the down side.