Below is the Views On weekly note by Mr. Ajit Mishra, VP - Research, Religare Broking Ltd
Markets remained in a consolidation mood for the third successive week but somehow managed to end marginally high. Mixed global cues combined with news of lingering India-China border issue was weighing on the sentiment. Meanwhile, buying interest in IT and pharma majors helped the benchmark to hold the ground. Amid all, the Nifty index settled at 11,504.95; up by 0.4%. However, the performance of the broader indices was the key highlight as both midcap and smallcap index gained in the range of 2.6-5.1%.
With no major event lined up, the focus would return to the global markets for cues. Besides, the news update on the India-China LAC tussle and further developments related to COVID-19 will be closely tracked by the participants. Needless to say, the scheduled derivatives expiry of the September month contracts would keep the traders on their toes.
We feel markets may consolidate further amid mixed signals and traders have no option but to align their trades accordingly. The fresh breakdown in the banking index has derailed the possibility of a directional up move in the Nifty, at least in the near future. On the downside, a decisive break below 11,400 in Nifty could result in a dip closer to the 11,200. We maintain our view to focus on the selection of stocks and positioning trades on both sides. We prefer defensive viz. pharma and IT for long trades while a rebound in banking and financials should be considered for short positions.
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