Week Ahead

After taking losses for two straight weeks, the market changed the course in the Diwali week ended November 4 driven by buying across all sectors with fall in volatility. Strong GST collection and supportive global cues also aided the market's up move.

The BSE Sensex climbed 760.69 points, or 1.28 percent, during the week to close at 60,067.62 and the Nifty50 jumped 245.15 points, or 1.39 percent, to 17,916.80, while the broader market outpaced benchmarks with the BSE Midcap and Smallcap indices rising 2.83 percent and 3.28 percent, respectively.

Given a slew of significant economic data releases and the ongoing earnings season, the volatility experienced this week is expected to persist into the forthcoming week as well.

We are at the end of September 2021 quarter earnings season. More than 2,100 companies will release their earnings scorecard in the coming week including prominent names like Britannia Industries, Aurobindo Pharma, Bosch, Mahindra & Mahindra, Power Grid Corporation, Bank of Baroda, Zomato, Tata Steel, Coal India, Grasim Industries, Hero MotoCorp, Hindalco Industries and ONGC.

Another key factor to watch out for would be economic data including inflation for the month of October and industrial output data for September, which will be important ahead of RBI monetary policy meeting in December 2021.

Technically Nifty50 formed bearish candle which to some extent resembles Doji kind of pattern on the daily charts and there was bullish candle formation on the weekly scale, as the index gained half a percent on Thursday and 1.4 percent for the week.

Nifty is respecting its 50-DMA (17,674) however the near term texture is weak. 18,000-18,200 is a critical resistance area where we can again see selling pressure. If Nifty manages to take out this zone then we can say that correction has ended and the market is ready for fresh expansion.

On the downside, if Nifty slips below its rising 50-DMA that may coincide with the 17,700 level then the index is expected to see further weakness towards the 17,450-17,250 zone.

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