Week Ahead

After a 1 percent cut on September 28, Indian markets staged a smart recovery the day after and managed to close the week only 0.2 percent lower. The Nifty settled 0.18 percent down at 19,638 and the Sensex was down 0.27 percent at 65,828 for the week.

Within sectors, Nifty Realty (up 2.4 percent) and Nifty Pharma (up 2.3 percent) were the top gainers while IT (down 3.5 percent) and Consumer Durables (down 1.4 percent) were top losers. Meanwhile, the broader market remained buoyant with Nifty Midcap 100 and Nifty Smallcap 100 gaining 1 percent and 2.18 percent for the week, respectively.

October is usually a favourable month, both for US and Indian markets. There are indications that this historical trend may play out this October too. The ‘triple whammy' of up-trending dollar, US bond yields and Brent crude is showing signs of easing. If this trend continues it will facilitate a recovery in markets.

In the week gone by, foreign institutional investors net sold equities worth Rs 8430.77 crore, while domestic institutional investors net bought equities worth Rs 8143.28 crore.

Cumulatively, FIIs net sold Rs 26,692.16 crore worth of equities in the month of September while DIIs net bought equities worth Rs 20,312.65 crore.

Technically Nifty has taken support from the 50-Day Exponential Moving Average (DEMA) of 19,562, we believe the 19,500 level on the downside and the 19,800 level on the upside are the two key levels to watch now. A decisive break on either side, will provide cues about the future direction in the index.

On the Bank Nifty, the bulls have successfully defended the key support level at 44,200. "However, challenges persist as the 20-day moving average (20DMA) at 45,000 continues to act as a strong resistance. The index appears to be consolidating within a range, with levels of 44,200 on the downside and 45,000 on the upside defining this range.

The Options data suggests that the 19,800 mark on the Nifty50 is expected to be crucial for the higher side, whereas 19,600-19,500 is likely to remain critical for further downside if any.