Volatility high, markets to remain pressured

The last week witnessed a negative undertone, which was significant but for the last trading session of the week, which saved the bulls from a total rout.

The combined exchange weekly advance decline ratio was negative as the figures stood at 8353 : 12693. The capitalisation of the same on a commensurate basis was also negative as the figures stood at Rs24788 crore: Rs37100 crore.

The NSE lost Rs1,23,747 crore in market capitalisation on a week-on-week basis. In terms of sectoral performance, technology was the only sector to gain, whereas the fall was led by the banking sector, followed by the mid-cap space. Of the total turnover transacted during the week, only 21% was initiated on upthrust sessions.

The overseas investors were net sellers to the extent of Rs509.3 crore and that saw the rupee close at the 45.01 levels vis-a-vis the US dollar (from previous week’s 44.86 levels). The US headline indices saw the benchmarks decline under 1%.

The UK FTSE 100 witnessed a mild pullback that bucked the trend of its US peers. In the Asian region, the Singapore markets outperformed its counterparts where as mild losses below 1% were clocked by the Japanese, Chinese and Hong Kong markets.

The overseas cues are cautious as the markets are exhibiting signs of exhaustion and may be precariously poised in the near to medium term.
Technically, the domestic markets continue to remain under pressure.

The weekly range advocated for the Nifty between the 5675/5375 levels have held as the benchmark trended within these levels. The coming week is likely to witness a range of 5625 on the upside as long as the Nifty stays above the bullish pivot at the 5500 mark.

In case of declines, the Nifty is likely to test a level of 5175 as long as the bears keep the Nifty below the 5450 levels. Being the derivatives expiry week, I expect the volatility to rise marginally.

Since the markets are trading light in terms of open interest, there are not too many shorts to square up. The outlook therefore remains downwards. Bulls should defer buy decisions.
lachman.ramchand@gmail.com