Weak sentiment may continue in near future

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This week, the benchmark indices corrected sharply, and Sensex was down over 1750 points. Among sectors, metal, reality pharma and financial indices lost the most but reality index was the top looser, shedding over 4 per cent whereas despite weak market sentiment PSU Bank index outperformed, rallied over 3 per cent.

Technically, during the week the market consistently witnessed selling pressure at higher levels. On weekly charts, the index has formed long bearish candle which indicating weak sentiment is likely to continue in the near future.

“We are of the view that, the short-term texture of the market is weak but due to temporary oversold conditions, we could expect one quick pullback rally in the near future,” says Amol Athawale of Kotak Securities.

For the short-term traders now, 50 day SMA (simple moving average) 65,700 and 65,400 would be the key supports zone while 66,500-66,000 could be the key resistance areas for the bulls. The current market structure is volatile and it will remain volatile for the next few trading session. Hence, buying on dips and sell on rallies would be the ideal strategy for the short-term traders.

For Bank Nifty, 50 day SMA or 45,000 would be the sacrosanct support level, as long as it’s trading below the same the weak sentiment is likely to continue. Below which, it will slip till 44,300-44,000. On the flip side, fresh uptrend possible only after dismissal of 50 day SMA or 45000. Above the same, it could move up till 45,400-45,500.

On broad basis, risk-averse sentiment prevailed due to the ongoing ascent of US bond yields and concern over higher rates for a prolonged period.