The market heads into Diwali with a profit-booking vibe

This was a second consecutive week of declines in the Indian stock market where Nifty and Sensex fell around 2.5% and it was one of the worst weeks in 8 months. The selloff can be attributed to the relentless selling of FII where they sold for Rs. 15,700 crore last week in the spot market as they sold around Rs. 25,500 crore in October. FIIs are not selling in the Indian market due to negative indices, while the recent strong outperformance of the Indian market leads to mean reversion, where recently Morgan Stanley and Numora downgraded the Indian markets to equal weight as a tactical change.

Next week is going to be a truncated week due to Diwali where the market is heading this festival season with a for-profit booking vibe. The week will start with auto sales figures for October where expectations are low while the market will also gauge consumer sentiment on Dhanteras and Diwali.

We will have significant revenue lined up next week including names like HDFC, IRCTC, Tata Motors, Bharti Airtel, HPCL, Sun Pharma, Eicher Motors, SBI, etc. but one clear trend is the pressure on margins due to rising input costs.

Globally, the outcome of the US Fed meeting on November 3 will be the most important signal for which it will be important to see how the Fed reacts to rising inflation and slowing economic momentum. growth. Another concern for the market is the increase in Covid cases around the world.

Technically, Nifty has slipped below its 20-DMA and the short-term texture has shifted to “Sell High” from “Buy Low” where 50-DMA is immediate support which is currently placed at the 17565 level while that 17450-17250 will be the next critical support area where we can expect the market to rebound. On the upside, the 18000-18200 area has become a strong supply zone and the short term view will remain bearish until Nifty trades below this area.

If we talk about Bank Nifty, it also shows signs of overshoot near the 41500 level, but it manages to close above 20-DMA, which is currently placed at the 39000 level. On the other hand, 38500-38000 is a zone of critical support; below that, it is vulnerable for the most downside. On the upside, 40000 will act as an immediate and strong hurdle while 40500/41000 will be the next hurdles.

Santosh Meena is Head of Research at Swastika Investmart Ltd.

To subscribe to Mint Bulletins

* Enter a valid email address

* Thank you for subscribing to our newsletter.

Never miss a story! Stay connected and informed with Mint. Download our app now!!