The stock markets extended losses to a fifth straight session, with the Sensex closing 232 points lower on Monday. While the index settled at 34,616, the Nifty ended 79 points lower at 10,516. A selloff witnessed in pharma, metal, auto and realty shares dragged the key indices lower. Top laggards on the Nifty included Dr Reddy's Laboratories, Sun Pharma, Yes Bank and Cipla, ending between 2.8 per cent and 4.7 per cent lower.
Technical view
According to Veracity Securities, the Nifty closed well below all short-term exponential moving averages (EMAs). As the week ended, the Nifty formed a ‘Bearish Engulfing’ candlestick pattern on weekly chart. Its 13 & 21day EMA is placed at 10,696 & 10,658 levels while 89-day EMA and 200-day SMA is placed at 10,494 and 10,323 levels, respectively.
“Taking into consideration the above observations the pessimism will continue to prevail going ahead. And we may see Nifty approaching lower levels. Talking about levels, 10,520/10,490 range would act as immediate support for Nifty. While on the other hand, 10,660/10,700 range would act as immediate resistance. Any pullback should be used to initiate Sell position.
Vikas Jain, senir research analyst , Reliance Securities, said, “The Nifty has ended down by 80 points with a loss of 0.75 per cent just above 10,500 levels, We believe Nifty should hold the support levels of 10,440 (50 per cent retracement of the entire up-move 9,951-10,929 over the past eight weeks). The option data also suggest a strong support near 10,450 levels as 10,500 strike has the highest open interest of 54 lakh shares in put options with an average price of Rs.55 since the start of the expiry. Nifty 10,500 PE has added 5.4 lakhs moving the OI to 59 lakhs in Monday’s trade.
Market view
Vinod Nair, head of research at Geojit Financial Services, said, “Short-term chaos from state election results and weak currency due to a surge in oil price led the market to come down. Investor’s sentiment on mid & small cap indices dampened due to high valuation and lower-than-expected quarterly results. Continued outflow of foreign funds has a key role in the current consolidation as the domestic macro looks fragile.
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