Comment

The week witnessed the markets skidding on overseas cues, high inflation and deficit worries.

The weekly combined exchange advance decline ratio was even as the figures were 12,083:12,614. The capitalisation on a commensurate basis was negative as the figures were Rs 40,520 crore:Rs 55,517 crore.

The banking sector took the brunt of the selling as the Bank Nifty was the bigger loser among the traded indices. The Nifty lost Rs 1,12,468 crore in market capitalisation during the week.

The overseas investors were net buyers to the extent of Rs 405.30 crore during the week. The rupee ended the week vis-a-vis the US dollar at the 46.73 levels (previous week 46.18 levels), which indicates nervousness in the forex markets, that may percolate down to the equities markets this week.

The Dow Jones Industrial Average and the Nasdaq Composite indices ended the week at new yearly lows and managed to stay above the 10000 and 2100 psychological benchmarks, respectively. The UK FTSE 100 index too moved down in tandem and tested the 30-week SMA before edging marginally higher.

The downward pressure is building up in the overseas markets and a mirror effect should not be ruled out for the domestic markets.

Technically, the domestic markets were advocated to gyrate between the 4600/5200 levels on the Nifty, a range which has held so far.

The lower tops and bottoms formation remains in place and as was advocated last week, bulls may postpone buy decisions, at least in the leveraged segment. This week is likely to witness a range of 5125 on advances and 4525 on declines. The bullish pivot for this week will be at the 4850 levels and the bearish pivot at the 4790 levels.

Traders should watch decisive moves beyond these thresholds before initiating fresh trades in either direction.
I remain of the opinion that traders should focus on capital preservation as a first priority this week.