By Ajit Mishra
The markets resumed their corrective trend after a brief period of consolidation, shedding over two and a half per cent for the week. Despite a flat opening, pressure from heavyweight stocks pushed the benchmarks lower, resulting in a muted session to close out the week. Mounting concerns over rising CPI inflation and persistent disappointments in corporate earnings weighed heavily on sentiment. As a result, the Nifty and Sensex settled near the week’s lows at 23,532.70 and 77,580.30, respectively.
Most sectors mirrored the benchmarks’; downward trajectory, with metals, FMCG, and auto stocks among the hardest hit. However, the IT sector showed resilience, managing to gain nearly a per cent amid the widespread selling. Broader indices, including midcap and smallcap stocks, were hammered, losing over 4% each.
The upcoming week is also shortened due to a holiday, and with the earnings season largely concluded, attention will shift back to FII flows. Foreign institutional investors have been on a consistent selling spree for the past month and a half, offloading around Rs 1.4 lakh crore in the cash market to date. Additionally, traders will keep a close watch on global market trends.
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The Nifty recently tested its long-term moving average, the 200 DEMA, after breaking down from its previous consolidation range of 24,000-24,500, marking an overall correction of nearly 11% from its recent peak. Key indices like banking, midcap, and smallcap also tested their long-term support zones last week. The performance of the banking and IT sectors will be crucial in determining the market’s next move. A breach below 49,900 in the banking index could further pressure the Nifty down to the 22,700-23,100 range, while any recovery may face resistance around the 23,900-24,200 levels.
Given the current conditions, a “sell on rise” strategy remains advisable for the index, while stock selection should be done with caution. For long-term investors, gradually accumulating fundamentally strong stocks with solid earnings could be a prudent approach.
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