Weekly Trend Report
- 12th October 2024
Week Gone By
The market ended the week with minor cuts, declining for the second straight week, with Nifty settling below the 25,000 level. The RBI Governor announced that the MPC decided to maintain repo rate at 6.5% and projected GDP growth at 7.2%, while shifting from a ‘withdrawal of accommodation’ to a ‘neutral’ policy stance. Titan reported 25% standalone revenue growth in Q2 FY25, while TCS’ net profit declined by 1.08%, and operational revenue increased by 2.63%. On the global front, the British economy rose by 0.2%, US CPI inflation eased to 2.4%, core CPI rose by 0.1%, and US jobless claims increased to 258,000.
Week Ahead
Investors await Q2 corporate earnings and major global markets like the US and China will be under scrutiny. The rupee-dollar exchange rate and crude oil prices are being closely monitored, as an increase in crude oil prices affects inflation, corporate margins, and consumer spending. India’s WPI and CPI will be declared on October 14, while balance of trade data will be released on October 15. Globally, US retail sales data will be released on October 17, Japan’s inflation data on October 18, and China’s GDP, industrial production, and retail sales data on October 18.
Technical Overview
- The past week exhibited a stark contrast to the preceding one, with the market undergoing significant consolidation within a narrow range.
- The trading week began with the Nifty50 index facing selling pressure and breaching below the 50-DMA, but managed to avoid a distribution day. Subsequently, the index experienced a slight recovery and moved sideways within a narrow range around the 50-DMA, ultimately closing the week 50 points lower than its previous close.
- The index sought to limit drawdowns, with the pivot point and the previous gap-down area near 24750 serving as immediate support.
- Concurrently, the fear index, or VIX, witnessed a 6.4% decline throughout the week.
- By the week’s end, most broader indices were trading with their uptrends under pressure, while their negative momentum showed improvement. While, several sectorial indices, trending with their uptrends under pressure, witnessed deteriorating negative momentum.
- In terms of market breadth, stocks trading above their 10 and 20-DMA exhibited a reversal trajectory from oversold territory, signalling initial positive signs. However, stocks trading above 50 DMA continued to trade below median levels for consecutive weeks.
- Notably, there was a significant improvement in momentum market breadth and market breadth volume, indicating improving stock participation and a potential transition from a no-money market to a hard-money market.
- Consequently, risk-aware market participants can consider initiating pilot positions.
- Looking ahead, the coming weeks are pivotal from a short-term perspective. Notably, the NIFTY Bank and FINNIFTY will no longer have weekly contracts starting November 20 due to recent SEBI directives. Only NIFTY will offer weekly contracts, potentially leading to increased volatility in the indices in the coming days.
- Of significance is the Nifty’s behavior against the 25000-25050 zone, given that the 25050 aligns with the 50-DMA, while the 25000 level remains a psychologically important threshold. The upcoming week may witness a subdued start, with the levels of 25050 and 25440 serving as probable resistance points. The 24750-24650 zone is expected to provide immediate and firm support, and sustainability above it could bolster bullish strength in the index.
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