Domestic markets under pressure despite rally

The last week witnessed a bearish hue as the bulls were on the ropes, but for the last session of the week, barring which the outlook would have been extremely negative.

The combined exchange weekly advance-decline ratio was negative as the figures stood at 7,701 : 13,542. The capitalisation of the same on a commensurate basis was also negative as the figures stood at ¤26,501 crore : ¤45,479 crore.

The National Stock Exchange lost ¤219,999 crore in market capitalisation on a week-on-week basis. In terms of sectoral performance, the fall was led by the banking index, followed by the mid-cap and technology benchmarks. Of the entire turnover transacted during the week, only 22% was initiated on uptick sessions.

The overseas investors were net sellers to the extent of ¤2,563 crore and that saw the rupee close at the 44.78 levels vis-a-vis the dollar (previous week 44.21 levels). The US headline indices saw Dow Jones Industrial Average logging a bearish piercing pattern and the Nasdaq composite marking a bearish engulfing pattern on the weekly charts. The UK FTSE 100 witnessed a bigger relative decline as compared to the US markets and indicates more dips.

The charts are indicating caution in the near term. In the Asian region, the Japanese market was the only gainer as the Singapore, Hong Kong and Chinese markets led the decline. The overseas cues are negative and the domestic markets will need sizeable positive triggers internally to rally sustainably.

Technically, the domestic markets still under pressure in spite of the rally on Friday. The weekly range advocated for the Nifty between the 6050 and 5550 levels has been violated as the benchmark tested the 5443 levels. This week is likely to witness a range of 6000 on the upside as long as the Nifty stays above the bullish pivot at the 5650 mark.

In case of declines, the Nifty is likely to test a level of 5250 as long as the bears keep the Nifty below the 5550 levels. Traders are advised to exercise caution on the long side as more evidence is required to confirm a trend reversal if any.