Market Scenario

During the week, the Indian Stock market traded within a narrow band for most part of the week . However, the markets broke out of the tight range and cruised downwards piercing all important levels. The benchmark indices recorded the lowest point since January end this calendar year. The infrastructure sector led the losing sectors.

In other words, Sensex was down 2.1% while Nifty was down by 2.9%. Likewise, CNX Midcap index was down 2.8%. It was a dismal end to the week for the Indian bourses which saw heavy selling pressure on Friday on concerns that India was considering a review of the Double Taxation Avoidance Treaty with Mauritius. This led to a sudden crash in share prices which caused the Nifty to breach its 200 DMA and close with huge losses and Nifty closing below the 5100 mark. Metals, banks, capital goods and realty sectors lost considerable ground.

However, some of the stocks like Cipla, Sun Pharma, and Wipro were gainers while PNB, BHEL and Bank of Baroda were the losers. The markets are expecting favorable news from the Government on Monday. However, it is to be seen how the Government reacts to the situation.

Technical Analysis: The overall market trend has turned bearish. On the downside 5050 and 4990 will be the strong support levels while 5150 and 5200 will act as strong resistance levels. Following heavy selling seen on Friday, some short covering may emerge initially on Monday. Avoid short selling. Traders need to be nimble footed and make swift entry and exits.

Suggested Strategy: It is advisable to wait and watch how the market unfolds on Monday. Cautious approach should be the watch word.