Week Ahead

The market erased all its previous week's gains and fell more than 1 percent in a volatile week ended December 9 despite sharp correction in oil prices. The slightly hawkish tone by the Reserve Bank of India, fear of global slowdown, and caution ahead of the FOMC meet next week caused selling pressure in the market.

The benchmark indices snapped two-week gains. The BSE Sensex corrected nearly 700 points to 62,182, and the Nifty50 dropped around 200 points to close tad below 18,500, while the Nifty Midcap 100 index was down six-tenth of a percent and Smallcap 100 index declined 1 percent.

The caution along with consolidation is likely to be expected in the coming week too, with focus on Fed meet outcome, and macroeconomic numbers (including inflation data from India, US, Europe and UK), followed by some kind of recovery in later part of the week.

Technically Nifty50 has broken its crucial support of 18,500 which was being hold for several sessions, losing nearly 400 points from its new all-time high. The index has formed bearish Engulfing pattern on the daily charts and bearish Piercing kind of pattern on the weekly scale, indicating the more power with bears..

The Option data indicated that 18,500-18,800 area could be near term resistance area for the Nifty50 where we have seen maximum Call writing, whereas 18,300 and 18,000 will be crucial support areas for the index. Hence, the broad range for the index in coming sessions would be 18,300-18,900 levels.