IIP disappoints, focus shifts to Inflation data - Angel Broking

The opening session of the week started quietly, but was subsequently followed by some selling pressure in the market. However, despite strong corrections in other Asian bourses, the Nifty, showed tremendous resilience by holding the 6170 level. On Tuesday, the bulls somehow managed to take control in the first half of the session, but once again, strong selling pressure near the day's high dragged the Nifty down and it closed with nominal losses. The following two sessions traded within a narrow range and with very lackluster movement. On Friday, IT heavyweight - Infosys posted better-than-expected 3QFY2014 numbers. This boosted market sentiments during the first half of the concluding session of the week, leading the Nifty to put on a nearly 1% gain. However, strong selling pressure once again emerged near the day's high, which pulled the index lower and trimmed all its early morning lows. The Realty, Capital Goods and Banking counters were among the major losers for the week; whereas defensive like IT, Healthcare and FMCG counters continued to outperform the broader Nifty. The Sensex and the Nifty ended the week with negligible losses of 0.45% and 0.64%, respectively, over the previous week's closing.

Pattern formation:

- The '89-day EMA' and the '89-week EMA' are placed at 20492 / 6098 and 19290 / 5786 levels, respectively.

- The '20-day EMA' and the '20-week EMA' are placed at 20870 / 6214 and 20476 / 6093 levels, respectively.

- The 'Bearish Engulfing' Japanese candlestick pattern on the weekly chart is still intact.

- The daily 'Stochastic' momentum oscillator is now showing a positive crossover.

Future outlook

During the week, two out of the five trading sessions have been a nightmare for the traders. The index showed dual sentiments amid extremely high volatility. As mentioned in our previous report, the Banking and Capital Goods conglomerates continued to trade with immense pessimism and hence, every time when the bulls made an attempt to pullback, they failed. However, the defensive sectors somehow managed to defend important support levels. Looking at the daily chart, it is clearly seen that the 6129 - 6140 zone on the Nifty is a good support zone. Only a close below this zone may trigger a near term pessimism in the market. In this scenario the Nifty may slip towards 6080 / 5970 levels. On the flipside, Friday's high of 6239 would now act as an important resistance level for the Nifty. A sustainable move beyond this level may bring back some optimism in the market and the possibility of testing 6280 - 6358 cannot be ruled out. We advise traders to remain cautious and stay away from long positions in interest rate sensitive counters.

Source : Equity Bulls

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