Indian Markets are heavily oversold - Alex Mathews

Markets had opened on a positive note tracking Asian peers but could not sustain the higher levels. It came down in the first hour of trade itself had a sideway trade till the first half of the afternoon session. Later in the day we saw some volatility and minor recovery in the afternoon session tracking US index futures but towards the last hour of trade it crashed in a big way below 4550 levels and closed well below it. Lack of domestic cues, sustained selling from the FIIs, weak global cues etc kept today’s sentiment negative.

We saw selling pressure in metal, power, capital goods, auto, banking and realty while gains were made in FMCG sector stocks and some pharma stocks. More weakness started to show up in Rupee which once again moved above 53 against dollar. The Nifty PC ratio has slumped to 0.89 indicating no major support at lower levels. One another domestic concern is that the liquidity seems to be tight as the cash rates climb to 5 month high. The call money rates were around 9.45/9.5 percent. RBI will come up with their OMOs to counter the situation and deal with the liquidity crunch.

Nifty has crashed in the final hours of trade after moving below the crucial support of 4561. Going forward the sentiment will remain negative as Nifty has been making new lows every day but one positive thing is that the markets have entered in the heavily oversold region with 50 Day RSI at 13 and 3 Day RSI at 4.5. As it managed to get support around 4500, then we may see a bounce back. Nifty is having resistance at 4610 and 4660 while the support is there at 4504 and 4464 levels.

Source : Equity Bulls

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