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The Dow initially fell sharply last night but later recovered to close only 40 points down. The Nasdaq and the S&P 500 closed nine and two points down respectively. This morning Asia is showing a mixed-bag kind of scenario—some markets like Hong Kong and Japan are down by 40 – 45 points while China, Taiwan and South Korea are anywhere between 0.4% (China) and 1.02% (South Korea) as we write this Market Outlook. Our man the SGX Dec Nifty contract was down only 10 points at 5839.

Today, we need to keep in mind that for the spot-Nifty (the index itself) the range between 5843 and 5876 would be the crucial supply zone to overcome. However, if the Nifty manages to close above 5843 today that would in itself be a good achievement for the bulls. In any case, first we need to observe whether the index can hold itself above 5843 or not; if it is able to do so then fresh longs can be created else it would be more of a wait and watch scenario. However, at lower levels below 5800 also would be another buying opportunity with a stop placed below 5733.

On the downside, below yesterday’s close of 5830, the supports are 5815, 5780, 5772, 5749 and 5733. The market would once again turn strongly bearish if the Nifty were to close below 5733. And two consecutive closes below 5640 would mean major weakness even from here on; however, that is quite unlikely as of now as we tend to think that—on the price scale—this downtrend has already completed its course. Our expectation is that this week the index would try and negotiate to clear 5900-mark but the real momentum would come only next week if it manages to hold itself above 5850.

We anticipate buying demand at lower levels close to or below 5800 and also above 5843 if sustained though initially the range between 5843 and 5876 might bring in considerable supply pressure too.

Rajat K. Bose