Equity benchmarks witnessed profit booking as the Sensex achieved the psychological mark of 50000 and concluded the highly volatile week on a flat note.
The market continued their weak trade on a volatile note after suffering steep losses in the previous two trading sessions but could not sustain it and closed down on report that Indian and Chinese troops came face-to-face at NathuLa in North Sikkim last week amid the tense border standoff between the two sides in eastern Ladakh.
They said the Chinese troops attempted to transgress into the Indian side of the Line of Actual Control (LAC) but were stopped by the Indian military personnel. It is learnt that a brawl broke out when the Indian troops stopped the Chinese soldiers.
The market has been booming for a long time with good news on the corona vaccine front, although next week is the last day of the F&O expiry in January and the stock market is witnessing a two-pronged uptick.
Markets are largely mirroring global cues but the benchmark looks slightly overvalued so the possibility of consolidation in the near term cannot be ruled out and it would be healthy for markets.
The Indian stock market is currently trading at a high valuation. In addition to budget adversity, an increase in the Corona case or a global lockdown will also have an impact on the domestic market.
Another important point is that the central banks have started raising interest rates globally. Therefore, cuts in the stimulus package by global central banks will reduce liquidity, which could put a brake on the flow of foreign money into the Indian stock market.
The broader market indices are undergoing slower pace of retracement as over past two weeks it has merely retraced 38% of preceding three weeks rally, indicating healthy consolidation, which has helped weekly stochastic oscillator to cool off the overbought condition (currently placed around 85).
We expect Nifty future to regain upward momentum from its technical bottom level of 14004 and relatively outperform the benchmark. Key point to highlight is that the Nifty midcap index has surged to new life-time highs, whereas small cap index is still ~22% away from all time high. Thus, we expect small caps to witness catch up activity. Structurally, the Nifty has strong support base in the range of 14004- 13808 as it is confluence of 61.8% retracement of current up move
Going ahead, we expect index to endure its northbound journey amid rising volatility ahead of key major event of Union Budget and eventually head towards our earmarked target of 14404 by the end of January, thus, buy on declines would be the prudent strategy as possibility of profit booking at higher levels cannot be ruled out which would offer incremental buying opportunity to ride next leg of up move. Meanwhile,
Technically, we feel that the Nifty needs to cross the level of 14373 points, and the trend continues to be profit booking on every rise and the next range to be watched out for is around 14008 to 14404 points and this can be achieved in the short term. The immediate support for the Nifty future are placed around 14008 and 13808 points.