New Delhi, Jan 21 Nifty ended the extended week with a fall of 1.47 per cent to close at 21,571.80, said Devarsh Vakil, Deputy Head Retail Research, HDFC Securities.
Nifty mid-cap 100 Index managed to close at fresh all-time highs on Saturday. It will be a trading holiday on Monday, January 22, with the Maharashtra government announcing a holiday in connection with the 'Pran Pratishtha' ceremony of the Ram Temple in Ayodhya.
Nifty has formed a bearish engulfing pattern on the weekly as well as on daily charts, which usually indicates bearish trend reversal. It would be advisable to stay cautious unless Nifty surpasses the resistance of 21,850. Support for the Nifty is seen at 21,500 and 21,285, he said.
Nagaraj Shetti, Senior Technical Research Analyst, HDFC Securities said Nifty on the weekly chart closed with the formation of long bear candle, which is also indicating a formation of bearish engulfing pattern (not a classical one) on the weekly chart. Hence, such bearish formation after a long time on the long-term chart signals an emergence of selling pressure in the market at the new highs.
The short-term trend of Nifty remains choppy. Having faced weakness after a small rise on Saturday signal weak bias for the market ahead. At the higher levels, the market could encounter strong overhead resistance around 21,750-21,850 levels and on the downside could find support around 21,300 levels in the near term, he said.
Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services said next week is a truncated week following holiday on Monday on account of Pran Pratishtha ceremony in Ayodha and on Friday on account of the Republic day.
Traders should stay light as earnings season would get in full swing leading to stock specific action largely. Moreover, interest rate decision of BoJ and ECB is due next week along with US GDP and PMI data which would have an influence on the global rate cut trajectory, he said.
Vinod Nair, Head of Research, Geojit Financial Services said subdued performance was reflected in the market amidst weakening global cues and elevated domestic valuations in mid- and small-caps, eroding investor confidence. Strong US retail sales and rising US bond yields diminish expectations of a swift Fed rate cut, redirecting investor focus to safer bonds. In addition, discouraging Chinese economic data further contributed to the lackluster sentiment.
While the private banks' bottom line aligned with market expectations, investors expressed disappointment due to the lesser-than-anticipated growth in deposits and the contraction observed in the NIM, he said.
The IT sector's outperformance on the back of better-than-expected results was not enough to counter the weakness in banking stock during this week. FIIs maintained a risk-off stance amid concerns over persistent interest rates and initial Q3 results suggesting a potential domestic earnings slowdown, he said.
Looking ahead, the interest rate decisions of the BoJ and ECB, along with US GDP data, are anticipated to drive market dynamics, he added.
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