During the past week, the financial markets experienced a period of consolidation, with benchmark indices largely unchanged as they took a break from recent declines. Despite multiple attempts at recovery, global market influences and pressure on certain heavyweight stocks continued to weigh on sentiment, limiting any significant upward movement. The sectoral performance was mixed, with gains in the realty and pharma sectors but losses in IT and auto sectors. Notably, broader indices outperformed, which helped alleviate some of the pressure.
Our market movements are closely aligned with global trends, and the prevailing structure suggests that pressure may persist. For example, the Dow Jones Industrial Average (DJIA), a key US benchmark, is trading below its long-term moving average (200 EMA), and further declines could occur if it breaks below 33,200.
Despite the correction, certain stocks across various sectors are displaying resilience and providing opportunities for investment. Additionally, broader indices are still holding above their short-term moving average (20 EMA), which adds a positive aspect. In light of this, it is advisable to focus on individual stocks while prioritizing risk management.
Regarding benchmark levels, traders should consider key support and resistance levels given the current choppy market conditions. Furthermore, we have identified specific stocks from the F&O baskets that could be suitable for both long and short trades.
Nifty (Current Market Price: 19,638.30):
Nifty made several attempts to breach the short-term moving average, the 20 EMA, last week but was unsuccessful. The bearish sentiment is likely to persist until it surpasses 19,750, and we anticipate a test of the 19,200-19,450 range in the near future. Conversely, a decisive breakthrough above this hurdle could trigger a recovery towards 19,850-20,000.
Bank Nifty (Current Market Price: 44,584.50):
The banking index is grappling with resistance within the moving averages ribbon, primarily due to underperformance in the private banking sector. A breach below 44,100 could initiate the next leg of downward movement towards the 43,500-43,800 range. To retest the 45,300-45,900 zone, a sustainable recovery above 44,900 is necessary.