Nifty ended the week down from 8,299.95 by 3.6% to close at 8,001.95. Commenting on the technical outlook, Jimeet Modi, CEO, SAMCO Securities said, ''Nifty had broken its key support area of 8,000 during the week and reached all the way down to 7,700 before bouncing back to 8,000 again. However 8,000 being the key bull support area will now be tested as resistance. The medium term trend has turned downward with the break of key levels, however 200EMA at 8275 leaves room for some upside during the week which could be akin to a dead cat bounce. It is likely that Nifty can retest 200EMA levels.
From a trading perspective, it would be better to avoid long trades and weaknesses at higher levels should be utilized to initiate shorts. From long-term perspective, the market is still in its corrective phase, which may take more time then what people expect to be over, before the upward journey resumes.''
While commenting on the outlook for next week, Modi opined, ''The volatility in the stocks, currencies and commodities markets are expected to remain during the week. However Pharma and IT to remain resilient on back of weak rupee. The market is expected to oscillate from overbought to oversold level with a wild range of 500 points on Nifty, 7,700 on the lower side and 8,200 on the upper side.
While the broader markets are expected to be volatile, the undercurrent has turned bearish in the medium term. The expectation of outcome of US FOMC meeting in September will significantly decide the direction of Indian and global markets. In the short term, it seems more a Sell on Rebound market than a Buy on Dips market.''
''The market this week witnessed the biggest ebb and flow in emotions during the year where in the Sensex tanked 2000 points on global fear factors and then recovered 1300 points on hopes that all is well with India and Chinese bearish sentiments can't dictate Indian markets.
Markets across the globe fell like crumbling house of cards scaring bulls worldwide. The trigger of Yuan devaluation sent emerging market currencies into tailspin including the Rupee leading to outflow of funds from India and other emerging markets. FIIs have sold stocks worth 2 billion dollars since the beginning of the month.
Bloomberg Commodity Index touched 16 years low throwing renewed concerns of deflationary spiral across all asset classes including equity, inspite of trillions of dollars of quantitative easing by the US and EU in previous years. If indeed the deflation unfolds which is in stark contrast to inflationary expectations, financial asset classes could enter into severe price corrections and India cannot remain immune.
However purely from economic angle, crude oil languishing at 6 years low, base metals, coal, rubber, iron ore etc at multi year lows offers tremendous savings in costs to the economy and increase in purchasing power leading to consumption lead growth in India. From long term perspective India still has demographics in her favor for sustained long-term growth.''
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