Short Covering Rally on Friday, Trend Remains in Corrective Phase

Indian broader indices and headline index witnessed short covering rally on Friday after a morning session decline. The NIFTY 50 index closed up 0.4% at 24854 after posting an intraday low of 24567. The NIFTY 500 index was up 0.27%.

Banks such as ICICI, AXIS and State bank of India posted sharp gains to push the Bank Nifty index higher, closed at 52094, up 1.57%.

IT index decline due to sharp selloff in Infosys and LTI Mindtree shares with a loss of 4.22% and 6.06% respectively. The NIFTY IT index closed down 1.47% despite Wipro and TCS shares gained marginally on Friday.

FII continued to sell Indian equities in October while DII, s were net buyers. FII sold 5485 cr od Indian equities on Friday and sold almost 80,000 cr of Indian shares this month. While II bought 74,000 cr worth of Indian equities this month.

Global markets continued to see buying interest with the US dow index has been trading at almost at all time high. On Friday US dow index closed up 0.08%, However, the Indian market is sharply lower from the ATH and witnessed long liquidation due to higher valuation. Though global central banks are cutting benchmark rates due to cooling off inflation, India cannot do so easily as latest CPI data reading was above RBI tolerance limit.

The larger set up of the Indian market seems to be in a corrective trend. A corrective trend is a part and parcel of a bull market and Indian markets need some strong corrective phase for few days or weeks for a better entry.

Market Outlook Index

NIFTY: the index may see resistance at 24940-960 range with immediate psychological level as 25000 mark. If the market fails to breach the immediate resistance then can see a decline towards 24750-730 range. Fresh buying may be possible only above 25k mark for max 100-120 points targets. The crucial resistance for NIFTY is pegged at 25200-230 range.

BANK NIFTY: The bank is likely to stay form above 51650-700 levels. Immediate resistance is pegged at 53000 mark as of now with next resistance at 52500 levels. One can take longs on dips towards 51700-800 range for intraday with stop loss below 51500 levels.;

NIFTY MIDCAP Select Index: The index may stiff resistance around 13080-100 range and failure to breach it may push it lower. The support is pegged at 12980-13000 range. A sustained trading above the resistance may provide scalping opportunity.

The report is being prepared by Bitupan Majumdar, an independent SEBI registered research analyst with registration code INH30006962. Please consult your financial advisor before taking investment decision.

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