The market lost momentum for the third consecutive day
today with Nifty closing below its 200-day moving average of 8126 level. An
index closing below its 200-day moving average signals short-term volatility
and downtrend in the market. The Sensex which gained 300 points in first five
minutes of trade closed marginally lower reeling under the effects of demonetization. The Sensex closed 6 points lower at 26298 level. The
Nifty raised merely 3 points higher to 8111. Market benchmark Sensex ended a
shade lower today after giving up early gains of about 317 points on widespread
fag-end selling amid sustained capital outflows by foreign funds and a weak
trend in European shares. However, NSE Nifty managed to eke out a small gain
and closed above the crucial 8,100-mark. Sentiment remained upbeat for the
major part of the session after lower inflation data raised hopes of a rate cut
by RBI next month, but the index turned lower towards the fag-end as
profit-booking emerged. Sensex started off on a strong footing and advanced to
a high of 26621. However, it succumbed to profit—booking at higher levels, falling
to 26239, before settling 6 points lower at 26298. NSE Nifty, however, managed
to close in the positive zone with a small gain of 3 points at 8111 after
shuttling between 8210 and 8089.
We
reiterate our view to hold positive yet cautious approach till 8000 is intact
in Nifty. The Traders with a short-term perspective should tread with caution
and consider initiating fresh long positions on a rally beyond 8150 levels. The
contract can then extend its rally and test resistances at 8200 and 8250 levels
in the near term. On the downside, a decisive fall below key support at 8000 is
needed to alter the upside momentum and drag the contract down to 7950 and then
to 7900 levels.
Supports: 8000 and 7900
Resistances: 8150 and 8250
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