Markets on the edge - Sense (19727) / Nifty (5833) - Angel Broking

The opening session of the week began with a percent downside gap considering weak closing in U.S. bourses on last Friday. Selling pressure intensified as the day progressed and as a result, the benchmark index (Nifty) slipped below the psychological support of 5900 on closing basis. Keeping aside Monday's and Friday's session, all the remaining sessions were directionless as neither bulls nor bears could dictate their dominance. However, on Friday's session once again the bears came back smartly and posted a closing just above the 5800 mark despite enhanced volatility seen during the first half. Once again, the Banking conglomerates proved out to be a major culprit along with the Realty, Oil & Gas and FMCG sectors; whereas the Healthcare and IT sectors somehow managed to close in the positive territory. During the week, the Sensex and the Nifty shed 2.65% and 2.98%, respectively, over the previous week's closing.

The "No Taper" rally fizzled out hastily after the announcement of RBI monetary policy on September 20, 2013. A weak closing on that day was followed by a pessimistic opening on Monday as the bears imposed their might on the market. Selling pressure aggravated as the day progressed and hence, the bears re-gained their position after sneaking below the 5900 mark. The index then went on to break the lower range of the 'Upward Sloping Channel' (please refer the exhibit) formed on an hourly chart. The bears have snapped the winning streak after the humongous rally seen in previous three consecutive weeks. In our previous report, we had mentioned a weekly 'Spinning Top' pattern, which is still intact. Hence, 5798 can be termed as 'Last ray of hope' for the bulls. In the coming week, if the Nifty manages to hold 5798, then the possibility of near term bounce towards 5918 - 5990 levels cannot be ruled out. However, the bearish scenario still exists considering the price development seen in the hourly chart. This is also supported by the negative placement of daily 'RSI-Smoothened' momentum oscillator. Hence, going forward, if Nifty sustains below 5798 mark, then we may witness a sharp decline towards the immediate support levels of 5750 (38.2% Fibonacci retracement level of the recent up move) and 5630 (50% Fibonacci retracement level of the recent up move). In case of amplified selling pressure, the index may even slip below 5630 to test lower levels of 5550 - 5500. In case of a bearish scenario, we are of the opinion that the fall would be influenced mainly by the Banking, Oil & Gas and Realty sectors. Also, we witnessed a muted movement in Indian Rupee (INR) until Thursday's session as it stalled around 61.50 - 62 mark. However, on Friday, we witnessed some movement towards the end of the session and in the process, the INR depreciated nearly two percent to close at the lowest point of the week. Hence, the weakness in currency may also fuel the pessimism in next few trading sessions. Thus, coming week is very crucial for the market and hence, we advise traders to trade with strict stop losses.

Source : Equity Bulls

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