Charts indicating further weakness

A bearish candle on daily charts and weak intraday formation is indicating further weakness from the current levels. We are of the view that, the current market texture is weak, but oversold

Mumbai: On the last day of F&O October expiry day, the benchmark indices corrected sharply as BSE Sensex was down by 905 points. Among sectors, almost all the major sectoral indices registered profit booking at higher levels, but Reality index lost the most shed nearly two per cent.

Technically, on Thursday, Nifty breached the crucial support level of 63,700 and post breakdown the selling pressure intensified which is largely negative.

“A bearish candle on daily charts and weak intraday formation indicating further weakness from the current levels. We are of the view that, the current market texture is weak, but oversold,” says Shrikant Chouhan of Kotak Securities.

For the day traders now, as long as the index is trading below 63,700 level, the weak sentiment is likely to continue. Below which, the index could slip till 63,000-62,750 points.

On the flip side, one relief rally possible only after dismissal of 19000/63700. Above the same, the index could move up till 19100-19150/64000-64150.

Dr VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, says: “Participatory note investments normally track FPI investments. From April through September FPI investment in India has been steadily rising. India now has the best growth among large emerging economies. Since China’s growth is fading foreign investors are now focusing more on India.”

However, the rising bond yields in the US have become a temporary headwind for foreign capital inflows. FPI have been sellers in October and this is likely to be reflected in participatory notes, too, in October.

Vinod Nair, Head of Research at Geojit Financial Services says, “till date, the actual domestic Q2 results are below par in comparison to the excited earnings forecasted. Similar disappointments are visible in developed economies.”

Downgrade in earnings and valuation is arising due to risk of further slowdown of the economy due to geopolitical and elevated interest rates. Also selling pressure intensified due to expiry-led volatility influencing investors to stay cautious.