Indian Markets Witness Sell-Off at Higher Levels
Indian Stock Markets witnessed sell-off at higher levels and markets closed nearly one percent lower on Friday. The sell-off led to lower stock valuations after the recent pullback in the markets. The markets will see stock specific action as quarterly results will be announced by companies in the coming weeks. Epic Research has shared the following viewpoints about market direction in coming week.
Bears Engulf on the streets as Bulls were being onslaught at higher levels of 10700 - 10680. The crash and Sell-off was amid multiple factors that were being discounted at one point of time from stock-specific quarterly earnings to FOMC Meeting. A lot was there for investors to be nervous about and that resulted in a sharp sell-off with a rise in volatility.
It was a classic retest of its 20 Days MA placed at 10740 which was seen with bears capitalizing at the crucial zone. The bearish engulfing pattern is seen on the daily chart with a range of last two days. A bearish engulfing pattern is a classic reversal pattern when found on a higher timeframe such as a Daily or weekly chart. It indicates the bears have a higher distribution at the levels that engulfed the day. While in a medium-term trend for Nifty being bearish, it further implicates the selling pressure at higher levels.
We have been cautious in our approach for the last few sessions given the sentiment, positive, that was building up in a bearish momentum. Today's sharp sell-off has set the tone for medium-term trend, That is; sell on any advances. Nifty now has a support at lower levels of 10250 - 10270 and beyond that, we may retest the 10150 levels. Resistance is now clearly placed at 10550 - 10570.
On international Front/ FOMC meet will be important to watch as Fed may be on its way for another rate hike for 2018 as a financial year. The Job reports and Employment numbers have been excellent in the last few quarters and that will give Fed the breathing space for another hike, This may put a dent on market sentiments further.