The 3&8 EMA negative crossover and a reversal Doji pattern witnessed a pessimistic opening for the Indian stock market. The stock markets opened with a gap down and thereby experienced a fall to close lower by almost 1.6%. The second day opened higher, traded on a negative note in the initial half of the session but recovered in the latter half. The third day was quite choppy, the stock market opened flat, was dragged down up to 5190 levels, and was again pulled up and finally dragged down to close near to where it opened. The fourth day opened lower and hence showed some optimism but ended with very less momentum all through. On the last day the stock market opened flat and was pulled up due to Pharma sector specifically Dr Reddy and Sunpharma, but was ultimately dragged down due to the poor quarterly result of Infosys and its impact on other IT sector stocks.
Last week recorded one more weakening session for the rupee. This was due to a strong sell off in the equities at the end of the week due to poor Infosys results, increasing dollar demand for oil imports and fall in Euro. The RBI policy review next week will decide the fate of rupee, till then it is expected to move in the range.
On the Bullion front, all the metals experienced a sharp fall except for Gold which rose up by 0.2%. The Indian jewellers took their strike back which gave momentum to the stuck demand from the Indian retail consumers as well as the traders. The fear of losing on their business, and the country heading towards the wedding season and Akshaya Trithiya made them suspend the strike after consistent closure for three long weeks.
India was likely to discuss on the matters concerning FDI in aviation sector last week. Accordingly the committee has insisted to remove the cap in FDI in aviation sector. However, the decision still lies with the parliament. Easing of taxes and safety mechanisms are few points that have been discussed. Indian is likely to permit FDI from Pakistan too. This will also help to bridge the social gap between the two countries.
The Nifty is yet to give a trend line breakout at 5300-5310 levels, so we maintain those levels as our immediate resistance. In case of a breakout the next target for the Nifty would be around 5380-5400 levels. The low made on Friday will still act as a strong immediate support for the stock markets. However, if after the profit booking, if short selling continues further then our next support level would be at 5130-5100 levels. For the medium term though the Nifty has given a negative stochastic crossover on the weekly charts, the stochastics are lying at the border of oversold zone. The long term trend is still positive and the Penant pattern is in the making for another upward rally.
Talking about the stock specific results, the Indian stock markets experienced a poor opening by Infy. Now let’s wait-n-watch what other stocks have set forth.
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