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Below the Quote on Weekly Market Analysis by Mr. Ajit Mishra – SVP, Research, Religare Broking Ltd

Markets edged lower amid excessive volatility and lost over one and a half percent, tracking feeble global cues. The tone was negative from the beginning, which further deteriorated with a decline in world indices however rebound on Friday trimmed some losses. Finally, both the benchmark indices, Nifty and Sensex, settled at 22,147 and 73,088.33 levels respectively. Meanwhile, all the key sectors felt the heat wherein IT, realty and banking were among the top losers. The broader indices also witnessed pressure and shed in the range of 1.4%-2.7%.

We expect volatility to remain high in the coming week too, citing the feeble global cues and ongoing earnings season. Among the key world indices, the Dow Jones Industrial Average (DJIA) is hovering around its medium term support zone of 100 DEMA i.e. 37,800 and if fails to hold the same then the 36,900-37,200 zone would be the next major support. In case of recovery, the 38,150-38,500 zone would act as a strong hurdle. 

The pace of the rise has been gradual for the last four months and Nifty has penetrated the lower band of the rising channel but managed to close above the same. We need sustainability above short term moving average i.e. 20 DEMA, which currently lies around 22,300 to strengthen the recovery. On the downside, we expect the 21,500-21,700 zone to act as a cushion. Meanwhile, traders should continue with a hedged approach amid the mixed indications and wait for clarity.

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