Market in corrective mode, may turn volatile

Mumbai: The equity market is expected to remain volatile, as macroeconomic data along with global factors are likely to influence the bourses.

The market will be looking forward to the release of industrial production, retail and wholesale inflation figures this week. These data points hold significance as the Reserve Bank in its last monetary policy kept the lending rates intact, thereby prioritising rising inflation over grim economic growth.

The US Fed meeting outcome and progress in Trump's impeachment process will be major international events while listing of Ujjivan Small Finance Bank IPO and fundraising by Yes Bank will be domestic factors that traders would keep an eye on.

"The Nifty50 has changed its bias from uptrend to a corrective stance. Double top stands confirmed, which will make markets correct either time or price wise or both. Generally such corrections take a lot of time. Momentum indicators had already weakened, now it is visible in the price action. Traders are advised to book profits in long positional trades and initiate short on rallies, keeping weekly highs as stops," said Jimeet Modi, Founder & CEO, Samco Securities.

Analysts say traders and short term investors need to be cautious and should try to reduce weak long positions at 11950 and 12000 levels.

"Technically, the Nifty breached its crucial support of 11950 and formed a big red body candle on daily chart. We also witnessed breakdown from the Head and Shoulder pattern on the hourly chart, which doesn't bode well for the bulls. On a weekly scale, it formed a Bearish Engulfing pattern and a sustainable move below 11888 may lead to a correction towards 11800 and then 11700. On the flipside, immediate hurdle is placed at 12050 and 12100 levels." Siddhartha Khemka, Head-Retail Research, Motilal Oswal Financial Services.

The National Statistics Office is slated to release the macro-economic data points of Index of Industrial Production and Consumer Price Index on December 12, followed a day later by Wholesale Price Index and India's November trade figures.