Bears had an upper hand in the week gone by and the charts indicate the trend of bearishness to continue.
Indian equity bourses plunged 4.2 percent in the week gone by following concern over comments made by US Fed, which alarmed investors on earlier than expected taper plan and interest rate hike. Further, emergence of new COVID-19 variant in South Africa and surge in COVID-19 infections in Europe spooked Indian markets on the last trading session of this week.
Concerns over new COVID-19 variant and announcement of strategic release of crude oil reserves by US softened crude oil prices as investors await the outcome of OPEC+ meeting.
US dollar strengthened against the Indian Rupee to end the week at 74.9. Index heavyweight Reliance industries witnessed heavy volatility during the week on the back of Aramco deal being called off amid valuation differences and its restructuring plans.
Auto index was among the worst performer this week following weak auto sales in festive season which continued to dent investor sentiments.
While most of the sectoral indices witnessed heavy sell during the week and closed on a negative note, the Pharma index managed to end with weekly gains. On the sectoral front, the auto index saw the highest loss of 8.4 percent followed by the Realty and PSU Bank sector losing 6 percent.
Technically, the index has continued the breakdown of the Head and Shoulder pattern after retesting the neckline, which indicates bearishness in the index. Moreover, the index has moved below 100 days SMA and also formed a Bearish Marubozu candle on the daily chart. However, the momentum indicator RSI & Stochastic has been trading at oversold territory. At present, the index has weekly support at 16700 and resistance of 17,300/17,600 levels.
Going ahead, investors will keep a close eye on the global covid-19 situation and economic data.
As market sentiments were dented following COVID-19 concern, Pharma stocks remained under investors’s buying radar. Stocks like Cipla (8 percent) and Divis Lab (3 percent) were among the top gainers in Nifty 50 index.
Bharti Airtel shares surged 3 percent in one week following tariff hike
Coal India shares rose 1.6 percent as board to consider dividend payment
Sentiments were dented towards Auto stocks following weak demand during festive season. Tata Motors (down 10 percent) and Maruti Suzuki (down 12 percent) remained as the top laggards in Nifty index.
Indusind bank shares continue to fall as the company deals with the fallout from the whistleblower allegations.
(Ankit Pareek is Research Analyst, Choice Broking.)