"The week gone by presented the most vulnerable situation of markets world over, the much awaited correction has set in and must have shattered the confidence of all players since one by one all technical supports got breached on the indices, and most of the analysts are writing off the bull run story of most of the markets including India. That is what happens in the markets, excesses on either direction, undue exhuberance or pessimism, which confuse the traders, where as long term investors who concentrate on the fundamentals of the stocks, economy are less disturbed and would be utilizing such panic situations to add to their portfolio.
For fourth week in succession the indices have posted negative closings on weekly basis, the surprise news of US Fed cutting the discount rate by 50 points came after close of our markets and before the close of European markets and opening of US markets on friday, changed the sentiment immediately and all markets closed positive with 2% gains over thursday. Our indices too found support around 200DSMA, though breached intraday, due to margin calls and triggering of stop losses, closed at the end of the trading above 200 DSMA but below 100 DSMA. Nifty futures discount stands at 17 points as at the end of the trading on friday, gives indication of intraday squaring up of short positions, however the open interest still staying around 80000 crores, points to continuation of volatility for some more time.
In our view, the lows posted on friday Nifty(4002.20) & Sensex(13779.88) are excellent technical levels, which should not be breached during the next week, to gain confidence by market players. No doubt that our markets will open with a huge gap on monday initially, on the overseas cues and post gains, but the sentiment being shattered investors who stuck shall resort to selling on rallies from now on. Gap down opening and Gap up openings are not providing any opportunity for traders, and only people with right postions overnight are benefitted. Inflation data released showed that is moderated to 4.05% since the prices of petrol and diesel are not touched so far.
The Week's range for Nifty shall be 4000(Support) and 4405 (Resistance); Sensex shall be 13780 (Support) and 15100 (Resistance)
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