Market may witness consolidation

The market continued to slide for the second day in a row on the back of weak global cues, worries over slowing GDP growth and major foreign fund selling. The benchmark indices like Nifty and Sensex ended 0.5 per cent and 0.8 per cent lower respectively.  The crude import, which rose 10.5 per cent in October, also dampened investors’ sentiment. 

Despite the weakness, the broader market seems resilient as both Nifty Midcap and Smallcap each gained 0.5 per cent.

The selling pressure was intense on the Nifty and volumes came in higher than the previous day, resulting in a distribution day. With that, the distribution count now stands at two on the Nifty. The market remains unchanged at a Confirmed Uptrend. Investors should begin with a smaller allocation and increase it gradually as market displays positive signals like additional follow-through days. Of the 2,061 stocks traded on the NSE, 880 gained, 831 declined, and 350 remained unchanged.

Technical view

Jay Thakkar, head technical and derivatives research at AVP Equity Research, Anand Rathi Shares and Stock Brokers said that both the Sensex and Nifty closed in the negative territory in the last trading session. There has been a negative divergence between Nifty and Nifty Bank. Nifty Bank has closed well in the positive territory which is a positive sign. Now, Nifty has fallen in a five waves declining structure on the hourly charts, hence a retracement of the same can’t be ruled out.

While, the fall in the Sensex seems to be an impulsive in nature. There is a short term support at 35,000 whereas a resistance at 35,500, levels. Now, for the short term a minimum retracement of this fall is expected that comes to 35,350 levels. 

Market view

According to Sahaj Agrawal, Kotak Securities, the Nifty has witnessed some correction after having gained significantly in the recent past. From lows of 10,000 levels it managed to scale upto 10,700-10,750 levels. A sharp correction in crude with strengthening rupee has helped the market outperform global peers. The index is expected to witness some consolidation before resuming its uptrend towards 10,900/11,000 levels and a stiff resistance around the 11,000 mark is also expected.  Banking and Financial services trade with a positive bias while IT remains under pressure.

—Ashwin Punnen