Market benchmarks Sensex and Nifty closed the week gone by in the red despite Friday's strong gains.
Sensex and Nifty fell about 4 percent for the week ended September 25 compared to a 5.2 percent drop in the S&P BSE Small-cap index, and 4.7 percent fall in the S&P BSE Mid-cap index in the same period.
Muted global cues, rising cases of COVID across the globe which could delay the economic recovery, uncertainty over the stimulus package, and talks of another lockdown in several parts of the world spooked investor sentiment.
The mood of the market looks cautious. Let's take a look at what top analysts foresee the market for the coming week:
Ajit Mishra, VP - Research, Religare Broking
Next week, participants will be closely eyeing the outcome of MPC’s monetary policy review meet scheduled on October 1.
Also, they would be eyeing the auto sales number which starts pouring in the first week of every month. On the global front, COVID related updates and performance of world indices will also be in focus.
We believe the bias would remain negative to sideways till Nifty holds below 11,300 and a breakdown below 10,800 may result in a fresh decline towards 10,550 levels.
We’re seeing volatile swings across the board and do not see this subsiding anytime soon.
Traders have no option but to align their trades accordingly and prefer index majors over others.
Investors, on the other hand, shouldn’t worry about these short term fluctuations and gradually accumulate fundamentally sound counters on dips.
Sanjeev Zarbade, VP PCG Research, Kotak Securities
The key events to be watched out in the near future would be the COVID-19 trajectory in India and abroad, progress on the vaccine front and global market cues.
Stimulus measures, if any, in the US could provide support to the markets. If the market corrects from these levels, then investors should actively look for accumulating good quality stocks for long-term wealth creation.
Vinod Nair, Head of Research at Geojit Financial Services
In spite of the Friday rally, the market is expected to remain volatile and directionless in the absence of solid triggers.
Global cues will continue to be in focus as a resurgence in virus cases around the world, leads to more restrictions and more pressure on economic recovery.
Traders are advised limiting overnight positions and Investors are advised to only accumulate quality stocks for the time being.
Joseph Thomas, Head of Research - Emkay Wealth Management
The factors which prevailed against the markets like the sell-off in the tech sector, the emergence of the second wave of the pandemic and the probability of geopolitical tensions centering around Chinese standoff, etc., may continue to influence the course of the markets in the coming weeks.
The expectations of a further fiscal package from the government ahead of the festival season is a factor that may endow the markets with some strength.
Nirali Shah, Senior Research Analyst, Samco Securities
In the coming week, markets are expected to be watchful of two major events – RBI’s MPC meet and Supreme Court’s announcement on interest on interest waiver.
While the popular stance on the Street is rooting for a temporary pause on any further rate cuts given the rise in retail inflation, the Court’s announcement on interest front could also remove the overhang on the sector and pave way for more clarity.
Any additional economic stimulus package from the government’s side would also bring cheer on D-Street.
Investors are advised to keenly keep an eye on these developments and be ready with their shopping lists of quality stocks for cherry-picking. They should now begin buying slowing on every decline.
Nifty is now trading at rising channel support, which also coincides with short-term averages of 20-EMA on a weekly timeframe. Traders should remain watchful of whether the price holds at these levels for a next up move.
A decisive break below 10,800 will lead to the opening of lower targets up to 10,500-10,400 levels.
The immediate outlook on a majority of sectors is bearish, thus we suggest traders maintain a bearish bias unless we see any signs of bullish evidence at channel support.
The immediate support and resistance are now placed at 10,850 and 11,200.
Deepak Jasani, Head Retail Research, HDFC Securities
The average cash market turnover on NSE was in line with the previous week despite being an F&O expiry week as declining markets led to lower participation among investors.
The broad up-move and healthy advance-decline ratio are encouraging signs for the up-move to sustain for the next few sessions.
Traders could come back on the long side, though with some caution. On up-moves, it can face resistance in the 11,130-11,180 band.
Nagaraj Shetti, Technical Research Analyst, HDFC Securities
The larger up-move as per the positive sequence of higher tops and bottoms has been broken recently and Nifty has shifted into a downward corrective action by the way of lower tops and bottoms in the last couple of weeks.
Hence, last Thursday's low of 10,790 could be considered as a new lower bottom of the sequence and Friday's up-move could be considered as a part of the new lower top.
Hence, further upside can't be ruled out by early next week before showing another round of weakness from the highs.
Nifty has formed a long bear candle on the weekly chart with a minor lower shadow. The formation of a bearish engulfing pattern of early September and the present formation of the long bear candles could show the emergence of selling pressure from the highs.
Hence, the near-term downtrend status remains intact and any further upside bounce from here could be a 'sell on rise' opportunity in the market.
Friday's sharp upside bounce could be a cheering factor for bulls to make a comeback, but the near-term downtrend status of the market remains intact.
Any upside bounce up to 11,350-11,400 could be a 'sell on rise' opportunity in the market and the expected decline from the highs could retest the lower 10,800 levels in the near-term. Immediate support is placed at 10,900.
Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities
On an immediate basis, the market may find resistance between 11,170/11,200 levels. Traders should reduce weak long positions around the same.
The advance-decline ratio stood at 1:5, which shows broad-based support for Friday’s up-move and it should last for the next 2 to 3 days. Support exists at 10,950 and at 10,850 levels.
Sameet Chavan, Chief Analyst-Technical and Derivatives, Angel Broking
In our sense, the market is not done yet and although we have seen a smart broad-based recovery on Friday, we expect the selling to re-emerge at higher levels around 11,150- 11,250.
On the daily chart, we can see a confirmation of ‘lower top lower bottom’ for the first time since May lows. Hence, the probability of Nifty sliding below 10,820 – 10,770 is quite high to test the next cluster of supports around 10,600 – 10,450.
However, with a broader view, we still believe that this is just a corrective phase within the large uptrend and thus, it is likely to provide a very good opportunity to accumulate quality propositions in a staggered manner.
But for momentum traders, it’s advisable not to get carried away by in between bounce backs as we are still not completely out of the woods.Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.