Comment

Last week witnessed intense trading activity as the markets slid through critical support levels and closed at 2010 weekly lows.

The traded volumes were low due to a holiday and seemed at par with the previous week on a pro-rata basis.

The technology and mid-cap segments led the decline and banking stocks brought up the rear. The weekly combined exchange market breadth was negative as the BSE and NSE advance decline ratio stood at 5,766:10,991.

The capitalisation of the same on a commensurate basis was negative too, as the figures were Rs 37,700 crore: Rs 55,251 crore. The NSE lost Rs 2,18,412 crore in market capitalisation, week-on-week.

Overseas investors were net sellers to the tune of Rs 7,287.5 crore during the week, which had a marginal impact on the rupee, which ended at the 46.18 levels vis-a-vis the US dollar (previous week 46.16 levels).

The overseas markets too ended the week at new 2010 lows as the Nasdaq Composite index fell harder than the old economy Dow Jones Industrial Average. The FTSE 100 fell in tandem with the Nasdaq. On the Asian front, the Singapore, Hong Kong and Japanese benchmarks fell more or less equally into a negative groove. This is likely to set a negative tone for the domestic markets as far as overseas cues are concerned and technology stocks may just extend their weak streak.

Technically, domestic markets have witnessed a breakdown below a crucial level at 4950 and unless a sustained trade is seen above this threshold, no fresh buys should be contemplated. The weekly range advocated the previous week (5250 and 4750) has held as Nifty bounced off the 4766 levels itself, thereby validating the current wave count.

This week is likely to witness a range of 4600 on declines and 5200 on advances. The bullish pivot will be at 4935 levels and the bearish pivot at 4870 levels. My fortnight-old view that traders should focus on capital preservation still holds and savvy traders may even press shorts at advances, though all fresh exposure must be on curtailed volumes only.