Border tensions snap market's three-week gaining streak despite net FII buying for the week

Market This Week

Broader markets fell more than a percent in a volatile week ended May 9, in-line with benchmark indices, as border tensions between India and Pakistan continued to rise, snapping the three-week gaining streak.

BSE Mid and Largecap indices slipped 1.4-1.5 percent, while the Smallcap index fell 1.3 percent for the week. Sensex declined 1,047.52 points or 1.3 percent this week to close at 79,454.47, while Nifty 50 shed 338.7 points or 1.4 percent to close at 24,008.

The Foreign Institutional Investors (FIIs) remained net buyers for the fourth consecutive week, buying shares worth Rs 5,087.42 crore, while Domestic Institutional Investors (DII) bought equities worth Rs 10,450.96 crore for the week.

Among sectors, Nifty Realty index plunged 6.5 percent, Nifty PSU Bank index shed 4.4 percent, Nifty Bank, Pharma, Energy, Oil & Gas down more than 2 percent each this week. On the other hand, Nifty Auto and Media rose more than a percent each.

"During the week, the market consistently faced selling pressure at higher levels. Technically, it has formed a long bearish candle on weekly charts and is also trading near the 200-day SMA (Simple Moving Average) support zone," said Amol Athawale, VP - Technical Research, Kotak Securities.

"…as long as the market remains below the 24,150/79900 level, weak sentiment is likely to continue. On the downside, it could retest the 23,800/78800 level. Further downward movement may continue, potentially dragging the market to 23,600/78200. On the flip side, a move above 24,150/79900 could signal a pullback rally. Above this level, the market could bounce back up to 24,350–24,450/80500-80800," Athawale added.

"For Bank Nifty, the 20-day SMA or 54,000 will act as a trend decider for short-term traders. Below this level, the index could slip to 53,000–52,650. Conversely, a move above 54,000 could push the index up to 54,800–55,000.The current market texture is uncertain and volatile; hence, levels-based trading would be an ideal strategy for short-term traders," the chartist said.

The BSE Smallcap index shed 1.3 percent with KSolves India, Gensol Engineering, KR Rail Engineering, Jindal Saw, Century Enka, Nacl Industries falling between 15-27 percent, while Timex Group India, KPR Mill, Faze Three, Transpek Industry, Ideaforge Technology, R R Kabel, CCL Products India, S P Apparels rising between 20-36 percent.

Nifty on the weekly chart has formed a bearish engulfing type candle pattern (not a classical one) this week after a sustainable upside in the last four weeks. This is negative indication and signals a crucial reversal pattern on the downside, as per long-term charts.

The geo-political tensions between India and Pakistan too is weighing on the market. Further weakness from here on could find strong cluster supports around 23800-23600 levels (weekly 10/20 period EMA and support as per change in polarity) and there is a possibility of an upside bounce occurring from the lows. Immediate resistance is placed at 24200.

Nifty traders appeared to embrace risk-off trades amid India-Pakistan tensions, as the index fell from its recent consolidation zone. The Nifty managed to stay above 24,000 as the index found support around the 21-day exponential moving average (EMA).

In the short term, bears may attempt to push the index decisively below 24,000 to gain the upper hand. A clear break below 23,900 could increase bearish bets in the market. On the upside, 24,250 may act as an immediate resistance level, above which sentiment could improve.