Uncertainty remains aloof - Weekly Review - Angel Broking

Sensex (18684) / Nifty (5686)

We had a flat opening on Monday in-line with other Asian bourses. Post the announcement of US presidential election on Wednesday, the Sensex/Nifty finally managed to conquer the stiff resistance of 18886 / 5729 to close well above it. However, President Obama's win opened up fresh fears of 'Fiscal Cliff' and dampened sentiments across global markets. As a result, we have witnessed nearly 4% correction in all the major global indices over the past three trading sessions. This was coupled with the poor second quarter numbers from the banking giant State Bank of India (SBI) and led to a minor correction in our market towards the latter part of the week. Nonetheless, it's really commendable that despite pessimism across the globe, our markets have managed to buck the trend. Undoubtedly, the Realty and FMCG sectors have outperformed the markets; whereas the Oil & Gas, Capital goods and Metal counters kept the markets under pressure. The Sensex ended the week with a nominal loss of 0.38%, and the Nifty lost 0.20% over the previous week's closing.

Pattern Formation

- The '20-day EMA' and the '20-week EMA' are placed at 18693 / 5683 and 18119/ 5498 levels, respectively.
- The monthly 'RSI' oscillator is moving higher from the 50 mark and the positive in the ADX (9) indicator is intact.
- The daily momentum oscillators viz, the 'RSI' and the 'Stochastic' are now signaling a negative crossover.

Future Outlook

Previously, indices slipped marginally below the support level of 18530 / 5630 and bounced back sharply after making a low of 18393 / 5583. We are now observing a mirror image of the breakdown, in the form of a breakout beyond the 18886 / 5729 mark. Indices managed to traverse the 18886 / 5729 level and started correcting immediately after a minor up move. This shows that the market participants are skeptical and hence, the market is struggling to find a clear direction. At this juncture, the daily chart depicts a negative crossover in the 'RSI' and the 'Stochastic' oscillators. This increases the possibility of a near term corrective move if our benchmark indices manage to sustain below 18656 / 5677 levels. In this scenario, our markets may slide towards 18589 - 18393 / 5650 - 5583 levels. A breach of 18393 / 5583 may reinforce the negative momentum and as a result, we may witness further correction towards 18194 / 5515, which is the 50% Fibonacci Retracement level of the rise from 17250 to 19138 / 5216 to 5815.

On the flipside, 19138 / 5816 level would act a strong resistance for our market. Only a sustainable move beyond this level would augment the buying interest and indices may resume to their higher degree trend, i.e. bullish. In this scenario, the up move may get extended towards 19542 - 19812 / 5850 - 5945 levels. In the broader sense, the near term trading range has widened to 19138 - 18393 / 5816 - 5583 levels.

Source : Equity Bulls

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