Weekly Market Update

It was a week of two way movement in most of the indices. The strength at the opening of the week was marred by casual profit taking at the higher levels, as predicted in this report last week. Distinct feature of the week was ongoing NEGATIVE DIVERGENCE between the two leading indices viz. SENSEX and NIFTY. Both the indices are not moving in tandem with each other. Another noteworthy point is that the volumes in F&O segment remain stagnant in spite of addition of 31 stocks to this group. Expect much more profit taking to emerge in the coming week as the trading community will remain confused about the immediate future of the market. A divided market cannot ensure sustained movement on either side though negative divergence tilts the balance marginally in favor of the sellers

It was a see-saw movement in the Nifty primarily due to a divided party among the market players. The Nifty closed marginally positive while the Sensex closed slightly negative . The Bears attacked the leaders of the rally Banking sector and RIL, but as expected the CGS, FMCG and IT sector stocks rescued the Bulls. The volumes were lower than previous session which is a bit of concern. After some profit taking at higher levels, the Nifty bounced from its weekly S1 of 4,143 points. It is holding on to its trendline support in green which is currently pegged at 4,185 points. A decisive breach of this level will test the support of 4,135-4,143 points. As long as 4,101
points holds the up trend is intact. Crucial resistance in the Nifty is pegged in the 4,323-4,332 points’ range. Failing to cross the resistance zone, another round of profit taking canno t be ruled out. From an immediate scenario, if the Nifty succeeds in crossing the bottleneck area of the 4,291-4,305 we could see it attempting the
monthly R2 of 4,332 points. Crucial support is at 4,185 points. One should be extremely cautious as we are seeing negative divergence in the Nifty. Traders should book profits regularly on rise. We had mentioned that the IT & FMCG stocks have to participate for the Nifty to sustain in the new high territory. Also keep an eye on the settlement finisher ONGC as above ones could decide the future movement of the
Nifty. Metals stocks have been consistent performers but how long can they run?