Saturday, 6 October 2018

Buckle up! Stay light as Nifty50 could retest 9,800-10,000 levels in medium term

The market is expected to remain weak on a medium-term basis, says Arun Kumar, Market Strategist, Reliance Securities




The momentum-based oscillators are in ‘sell’ on near and on a medium-term basis. Given the sharp fall over the past few weeks, the market is expected to remain weak on a medium-term basis, Arun Kumar, Market Strategist, Reliance Securities, said in an interview to
Moneycontrol’s Kshitij Anand.
Q) The Nifty50 seems to be in the bear grip. Is it time to go short on the index? If yes, what will be the target and stop loss?
A) The Nifty50 index formed a “Bearish Engulfing” on the monthly time frame (September 2018). In general, this pattern has a negative
an implication for the Nifty50 index and the market in general.
Further, the Nifty 50 index closed below its 200-day simple moving average (SMA) for the second day in a row which is not a bullish sign.
The momentum-based oscillators are in ‘sell’ on near as well as on medium-term basis. Given the sharp fall over the past few weeks, the
market is expected to remain weak from a medium-term basis.
Our proprietary Greed/Fear indicator, which is a good sentiment measure of medium to long-term trend for the market, is well below its
equilibrium signalling that the capitulation is yet to come.
Taking that into consideration, the Nifty50 index may attempt to test the zone of 9,800 to 10,000 levels in the near-term.
Q) How are markets looking on technical charts? What are the other parameters which investors should watch out for next week?
A) The key indices and major stocks are displaying weak trend on the charts. The breadth of the market continues to remain in the negative
zone, as there is the number of stocks hitting fresh 52-week lows, while there are hardly a handful of them scaling to 52-weeks highs.
Given the negative readings, any sharp fall on the Nifty50 index towards 10,000 may attract some contra-trend buying. Therefore, one has to
be very nimble footed while attempting any such contra trades.
Q) What is your view on small & midcap stocks? They have fallen over 20% from their highs which signals that they are in a bear market?
A) We are yet to see a proper capitulation in the market as measured by key indicators followed by us, therefore, there may be incremental
legs of weakness before the final bottom is confirmed.
Till then, it is better to stay on the sidelines.

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