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Markets consolidated in a range and settled lower for the fifth successive week, mainly pressurized by weak global cues. The tone was positive for most of the week but a decline in the final sessions pushed the index in the red. On the benchmark front, both Nifty and Sensex settled closer to the week’s low at 19265.80 and 64886.50 respectively. Meanwhile, a mixed trend on the sectoral front kept the traders busy wherein banking, financials and IT pack witnessed recovery while energy and pharma lost over a percent each. Amid all, the buoyancy in the midcap and smallcap basket eased some pressure.

We believe it is a healthy correction so far citing the pace of decline and continued outperformance of the broader indices. However, we suggest not to preempt the reversal and stay with the trend. Apart from the domestic factors, the performance of the global markets will continue to provide cues. Among the major indices, we are seeing a possibility of a rebound in the US markets but it would be critical to hold the 33,700-34,200 zone in the Dow Jones Industrial Average (DJIA) for any meaningful recovery.

Nifty has finally slipped below short term moving average i.e. 50 EMA, which may prompt a further decline to the major support zone of 18,900-19,100. In case of any attempt to rebound, the 19,500- 19,650 zone would continue to act as a hurdle. Among the key indices, we expect banking, financials and IT to show further resilience while pharma and energy may continue to attract selling. Amid all, participants should continue stock-specific trading approach and maintain positions on both sides.

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