Surge in volatility to continue this week
The Sensex and the Nifty ended 444 points and 135 points lower at 26830 and 8296.
Markets closed lower during the week ended due to unexpected demonetisation of Rs 500 and Rs 1000 notes, US election results and weak macroeconomic data. The Sensex and the Nifty ended 444 points and 135 points lower at 26830 and 8296. Market breadth tur-ned negative and heightened volatility triggered selling in midcap and smallcap stocks.
The combined market valuation of six of the 10 most valued Indian firms fell sharply by Rs 91,800.9 crore last week. Demoneti-sation has dampened investor sentiment.
The key concern is that demonetisation of the Rs 500 and Rs 1000 notes will compress transactions and hurt business in a significant way in the sectors ranging from real estate, consumer durables, building material, etc. Analysts believe that flushing out black money can transform the Indian economy significantly.
For the week ahead, chartists predict a trading range of 26,200-27,500 and 8,100-8,500 for the benchmark indices. Support for the indices evident at 27,500 and 26,250 and 8200 and 8110. Investors and traders should be flexible and must be just as willing to sell short as to buy.