The financial market is a volatile environment, constantly fluctuating due to myriad factors. One such is India’s Nifty index, which due to various influencing factors, anticipates a stable start but is expected to remain prone to selling pressure at higher levels in the week ahead.
This is majorly due to the fretful geopolitical outlook the country is currently dealing with. Nifty50, last Friday, witnessed a sharp pullback and ended with gains totalling to approximately 175 points on a weekly note. Despite seeing this short-term tactical pullback from the lower levels, Nifty is not completely out of the murky waters yet, as it stays put under selling pressure at heightened tiers.
The gravitation of the market will continue to remain downwards as long as Nifty stays below 17273.73 points, which is the most significant pattern resistance that lies close to the Double Top resistance point and the 100-DMA mark it has to cross.
As per the Volatility Index, or INDIA VIX, there seems to be no respite for the Nifty. VIX observed an increase of 1.81 percent to 20.4875. The Volatility Index, which measures market volatility through the market’s perception of the future variance of the Nifty index, has gone up. This rise signifies a potential for a further increase in fluctuation and turmoil in the market.
Drawing lines parallel to sectors, in last week’s session, Nifty Energy and the Nifty Commodities index got stronger. Significant net purchases on the large-cap front continued. The market breadth, an indicator used to gauge the general sentiment of the market, remained rather uninspiring. Apart from the energy and commodity sectors, almost all of the other sectors ended losing money.
On the other hand, the Nifty IT and Pharma experienced a technical pullback led by a very few stocks. A reliable follow-through is still not seen on the technical charts. Regardless, certain patterns on the charts might hint at potential upsides. However, these are more of a technical pullback nature rather than a resumption of any trend.
The Relative Rotation Graphs (RRGs) point out at staying away from the IT, Auto, Financials, Media, and Services sectors. The RRG also advises investors to stay cautious on the Realty, Infra and Construction sectors while slightly dedicating themselves towards Consumption and Commodities space.
In deeper trenches, one must remember that FII’s are sellers in the market under the present condition, applying a strong selling pressure. Nifty’s behavior vis-à-vis its vital pattern resistance at 17273.73 would be crucial for the near term.
Overall, this daedal financial setting calls for market participants to remain highly stock-specific and guard their portfolios diligently with a cautious approach in the coming period.