Indian Stock Market Outlook by Epic Research
Nifty slips below 10900 as selling pressure intensified amid negative global cues and domestic concerns. The CEA comments further heightened the selling pressure with Nifty falling to sub 10800 and marking low of 10637.
Comments by Mustafa Nadeem, CEO, Epic Research...
Though recovery in later part of the week was on the back of rumours of a "possible Stimulus" or Government focused policy on investments and Changing corporate Tax to 25%. All such were the factors that helped Nifty sustain the 10700 marks but we still have seen a week with losses for a second consecutive week.
This is the first time we have seen Nifty closing below 100 days SMA on the weekly timeframe. if not a bearish signal, this is an indication of the very strong support that is at these levels. We have been sustaining the 10 days SMA for a while and last time we have seen a sustainable move from the same MA.
Technically this is a make or break point for Nifty. If we are able to sustain the 10700 area for coming week a possible overdue bounce back can be seen. There are technical indicators which are showing divergence and a possible pullback can be played from these levels. A close below 10700 on weekly basis would trigger further short side momentum to 10400 - 10300.
Traders/Investors are now looking towards the government for some kind of favour in terms of stimulus or changes in policies such as Higher GST for Auto companies or maybe terms of changing the corporate tax. There is already a muted growth in credit in the economy. We are seeing lower guidance for FY20 amid falling earnings figures. PSU Banks are already witnessing high NPAs and there is very least probability of any capital infusion at this point in time. The broader market is very much in the bearish grip. On top of it, we have seen Rupee depreciating to 72 marks in last few couples of days.
The very much scenario now seems that ball is in the government's court and they would have to come up to something to address a few challenges of industries and sectors and there has to be some roadmap for the same.
In the coming week, we believe Nifty can be in a broader range of 10700 - 11000. This can be possible on the back of oversold indicators pointing to a divergence now and at the same time any meaningful progress or announcement from the government's side. Though we are still cautious that even if there is a pullback how much would it be sustainable as global markets remain volatile amid Trade war and Tweets.