Week Ahead

The Nifty50 closed down 208 points to 19,542 while the BSE Sensex was down 885 points to 65,397. Among the broader indices the BSE Smallcap Index ended on a flat note, while the BSE Midcap and Largecap indices fell 1 percent each in the week gone by, as it battled multiple global factors including tension in the Middle East, spike in the crude prices and rising bond yields in the US.

Even as the earnings season is playing out to script, the aforementioned factors could linger a while. The US 10-year yield touched 5 percent as the Fed looks to extend its monetary tightening. For India, the bigger worry could be a spike in crude price if the Middle East tension continues to be on the boil.

The varied results of blue-chip companies, influenced by subdued global & domestic demand, are steering the market towards a consolidation trajectory in the near term.

We will enter third week of earnings with almost 250 companies set to report their September quarter numbers. From the trend so far, analysts have observed that banks are continuing their streak of improving asset quality and strong profit growth while pain persists in IT. FMCG majors have also disappointed the Street with topline and bottomline not meeting analyst estimates.

Going ahead, we are set to see more numbers from the automobile sector. Index heavyweight Reliance Industries will also report its numbers on October 27. Apart from that, other Nifty 50 companies like Axis Bank, Tech Mahindra, Asian Paints, Maruti Suzuki, Bajaj Finserv, SBI Life, Cipla, Dr Reddy's and NTPC will also declare results.

Technically Nifty50 has formed Doji candlestick pattern on the daily charts on Friday as the closing was similar to opening levels, indicating the bulls and bears are indecisive about the further market direction, while on the weekly charts, the index has formed bearish candlestick pattern with upper shadow, but maintained higher highs, higher lows formation as well as previous week's low of 19,480, which is expected to be crucial for the coming week too. If the index breaks the same support decisively, then 19,300, the low of current month can't be ruled out but holding of the support can take the Nifty50 towards 19,700-19,850 area again.

Markets are likely to remain sideways to volatile in the coming week within a wider range of 19,300-19,850.

The Options data also indicated that 19,500 is expected to be key level for the market downside, while the hurdle on the higher side will be 19,600-19,800 area.