Nifty may slip to 4106: Asit C. Mehta

According to Asit C. Mehta Morning Report, for the short-term, the downward targets for the Nifty are 4106, 4002 and then 3961.

Asit C. Mehta Morning Report:

Market expected to open firm

Indian market is expected to open firm on Monday taking cues from global markets. However, profit booking at higher levels can not be ruled out on higher crude oil prices and political uncertainty. Media reports on postponement of projects may also dampen the sentiments.

On Friday, U.S. stocks declined as traders contemplated the previous day's selloff, record-high oil prices and weakening consumer sentiment. The Dow Jones Industrial Average finished down 106.91 points, or 0.9%, at 11,346.51, and the S&P 500 was off 4.77 points, or 0.4%, to 1278.38. The Nasdaq shed 5.74 points, or 0.3%, at 2315.63. Each index lost at least 3% on the week.

Today, Asian stocks are trading positive with marginal gains as energy and mining shares rose on higher raw material prices. The MSCI Asia Pacific Index added 0.3 percent to 137.35 as of 10:45. Japan's Nikkei 225 Stock Average was little changed at 13,559.68. Most other markets in the region are also trading firm.

Weekly Technical Analysis

The key benchmark indices slumped as a political rift over nuclear deal, soaring crude oil prices and high inflation weighed heavily on the market sentiment. The BSE Sensex fell to the lowest level in 13-months while the S&P CNX Nifty touched a 10-month low. Sensex declined 769.07 points or 5.28% to 13,802.22 in the week. The S&P CNX Nifty lost 210.90 points or 4.85% to 4136.65 in the week. The BSE Mid-Cap index declined 473.68 points or 7.85% to 5,558.75. The BSE Small-Cap index slumped 459.59 points or 6.21% to 6,938.07.

Outlook

In the daily charts, the Nifty has closed below 5, 10 and 50-day (exponential moving average). The RSI and MACD in the daily charts are in the sell signal .The stochastics oscillator is in sell mode. The Nifty expected to be bearish in short term. Technical charts indicate more downside.

In the weekly charts Nifty has closed below 20-week (exponential moving average).RSI and MACD in the weekly charts are in the sell signal .The Nifty expected to be bearish in short term. Technical charts indicate more downside.

Nifty declined to an intra-week low of 4093 before staging a recovery. But subsequent moves make it obvious that the index is poised to decline further in the near-term. The index is currently pausing close to the first target of the C wave from the 6357 peak. For the short-term, the downward targets for the Nifty are 4106, 4002 and then 3961. The negative move will intensify only on a decline below 3950. Resistances would be at 4320 and then 4450. Fresh long positions are advised only on a close above the second resistance.