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ShareLast week saw declines as the bulls were conspicuous by their absence; the expiry of the October series saw a relatively sedate squaring up of shorts (which is customary as per empirical evidence), and the bears emerged with daggers drawn.
The benchmark indices lost up to 5-6 % on a week-on-week basis and the market internals indicate a weakness that is likely to extend to the coming week/s. The combined exchange advance decline ratio was negative as the figures were 6132:13746. The capitalisation of the breadth was outright negative too as losers outnumbered gainers by a wide margin. The NSE lost Rs 3,21,997 crore over the previous week as the values declined at a geometric rate.
Overseas investors pulled out Rs 34.90 crore during the week, which was primarily due to the selling on October 29, 2009. The rupee closed at the 46.95 as investments by foreign institutional investors slowed to a trickle.
The overseas markets encountered resistance at higher levels as psychological hurdles saw profit sales as the buying evaporated on concerns within the bull camp. Major overseas indices logged negative returns with the Nasdaq Composite, FTSE 100 and the Dow Jones Industrial Average falling in that sequence.
This week is likely to witness a sell-on-advances approach as the buying conviction is lacking.
Technically, the domestic markets have retraced from near the Fibonacci levels of 5200 on the Nifty as a critical retracement pattern has been completed. The bulls are likely to remain under duress as the weekly/ monthly charts are pointing towards further declines.
The 5300/4825 range advocated for the Nifty was violated on the downsides as the bulls gave way to the bears. This week is likely to witness a range of 4475 on declines and 5250 on advances. For the bulls to stand a fighting chance, the Nifty must remain above the 4900 levels and the bears will retain their initiative as long as the Nifty remains below the 4800 levels. Traders are advised to focus on capital preservation as a priority in the near term.
