Charts point to lack of strength in market

The benchmark indices reversed some of the Thursday's gains on Friday as traders turned cautious ahead of key earnings and economic data.

The BSE Sensex was down 86.88 points at 38736.23, while the Nifty 50 fell 35.20 points to 11547.70.

The broader markets outperformed frontliners with the Nifty Mid-Cap and Small-Cap indices rising 0.46 per cent and 0.33 per cent respectively.

The sectoral indices exhibited mixed trend. While IT, Consumer Durables, Metal and Realty ended with decent gains, other sectors like Banking, Capital Goods and Oil & Gas were the top losers.

Technical View
According to analysts, the Nifty slipped into minor weakness on Friday, as an attempt to show upside breakout of the key overhead resistance at 11650 was fizzled out.

"A negative candle was formed on Friday on the daily chart with long upper shadow. This pattern indicates a lack of strength in the market to sustain above the hurdle of around 11625-650 levels (resistance as per the concept of change in polarity)," Nagaraj Shetti, Technical Research Analyst, HDFC Securities.

"We observe a formation of long negative candle with minor lower shadow on the weekly chart. The opening downside gap of last week is intact and the last two weekly candle patterns signals a lower top reversal as per weekly timeframe chart, he further said.

The short term trend of the Nifty is weak. The crucial overhead resistance of 11625-650 levels is unlikely to be broken decisively on the upside during this week. Next lower levels to be watched around 11425 in the next few sessions.

Market View
Analysts expect the markets to remain choppy in the near term in the backdrop of weak domestic sentiments given the on-going economic slowdown. The monsoon has shown considerable improvement over the past 1-2 weeks which is positive for Indian economy. However, the progress of monsoon would be actively tracked by traders and investors.

"Earnings announcement by companies is likely to lead to stock specific volatility. On the global front, on-going geopolitical tensions between US-Iran could have a bearing on Indian markets as crude price have inched higher and is likely to keep the market participants on edge," said Ajit Mishra, Vice President, Research, Religare Broking Ltd.

For the week, the Sensex has closed lower as markets reacted negatively to the union budget announcements related to enhanced tax surcharge on high income earners. Except the US equities, other major global benchmarks were also weak. The strength in the US markets was mainly on account of improved jobs data and Fed comments on sticking to accommodative monetary policy. The Dow Jones is trading at record highs, aided also by easing of trade tensions.

"Technically speaking the Nifty has given double top breakdown below 11620 zone so trading below 11620 it can see more dips towards strong support of 11450-11400 zone, resistance for the Nifty is coming near 11620-11700 zone. The Nifty bank has immediate support near 31400-31200 zone and resistance is coming near 30850-31080 zone," Rohit Singre, Senior Technical Analyst, LKP Securities.