HDFC Securities says that the Indian Benchmark equity indices ended lower on the back of profit booking on Jan 15 amid weak global cues. The Nifty kept falling since opening with small bounces in between and made a bottom at 1415 Hrs. A late feeble recovery ensued. At close the Nifty was down 161.90 points or 1.11% at 14,433.70. Nifty closed the week with a gain of 0.6%.
Volumes on the NSE were higher than the previous session. Among sectors, all of them ended in the red with IT, PSU Bank and Pharma falling the most. Advance decline ratio was severely negative.
Asian shares tripped lower in afternoon trade on Friday, reversing earlier gains as rising COVID-19 cases in China reinforced investor concerns over the prospects for a global economic recovery. European stock markets traded lower Friday, with investors weighing increased Covid-related restrictions with the announcement of additional U.S. stimulus.
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U.K.’s Office for National Statistics reported that the country’s economy shrank 2.6% in November, after six straight months of growth since lockdowns in the spring. But that was less than the 4% drop forecast.
The Nifty has given the first signs of reversing after a steep rise. Advance decline ratio has also raised concerns over the last few days of possibility of a formation of a short term top. 14563-14256 are the resistance/supports for the Nifty in the near term
After showing range bound action with high volatility in the last couple of sessions, Nifty shifted into a sharp weakness on Friday and closed the day lower by 161 points. Nifty opened on a positive note, slipped into further weakness in the early mid part of the session amidst a range movement. The weakness got intensified in the mid to later part of the session and Nifty finally closed with a minor upside recovery note.
Nifty as per weekly timeframe chart, formed a small negative candle with upper and lower shadow. Technically, this pattern could indicate a formation of doji patterns at the new all time highs (14653). Normally, a formation of doji after a reasonable upmove could signal warning for trend reversal. But, few such doji patterns have been formed in the last 9-10 weeks and the market continued its upside momentum since then.
Conclusion: The sharp decline of Friday seems to be a one day drop in the market as per the symmetrical chart pattern of daily and we expect Nifty to show an upside bounce to retest the new high of 14653 in the next week. On the flip side, a sharp follow-through weakness in the next 1-2 sessions is expected to negate this pattern. Immediate support is placed at 14350
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