Volatility may remain high in coming weeks

It was a volatile day on Friday in the market with portfolio allocation to the council of ministers, global cues and domestic economic data impacting the sentiments. Market had a knee jerk reaction to appointment of Nirmala Sitharaman as the new Finance Minister. Sensex dropped 748.10 point from day's high of 40,122.34 to an intra-day low of 39,374.24 before a recovery.

Sensex finally closed at 39,714.20 down 117.77 points or 0.30 per cent while the Nifty-50 closed at 11,922.80, lower by 23.10 points or 0.19 per cent. The broader markets were mixed with the BSE Mid-Cap index was down 0.65 per cent.

The sectoral indices on BSE closed mixed, the gainers included IT (1.19 per cent), Technology (1.07 per cent), Oil & Gas (0.88 per cent) while the losers included Metal (-1.07 per cent), FMCG (-1.03 per cent), Auto (-0.70 per cent).

Among the Sensex constituents only eleven stocks closed in the green while 19 recorded fall.

The top losers included Yes Bank (4.27 per cent), ITC (3.61 per cent), Mahindra & Mahindra (2.17 per cent), Vedanta (2.01 per cent) and NTPC (1.59 per cent).

Inflows from foreign portfolio investors were lower on Friday compared to past few sessions. Foreign portfolio investors were net buyers of equities worth Rs 676.15 crore, the domestic institutional investors also turned net buyers by Rs 394.09 crore, as per provisional data provided by the stock exchanges.

Technical View
Dharmesh Shah, Head - Technical, ICICI Direct said, "Nifty gained for a third consecutive week as it consolidated in a range with positive bias and closed at 11,922 levels up by 0.7 per cent amid sharp decline in the crude oil prices. Volatility is likely to remain high in the coming week on account of the RBI Monetary Policy and truncated week.

Despite volatility, we do not foresee the Nifty to breach the major support area of 11,600, so any dips should be used as an incremental buying opportunity. The index is expected to resolve above its last two weeks high (12,041) and head towards 12,200 in coming weeks.

Nagaraj Shetti, Senior Technical & Derivative Analyst, HDFC Securities said, "Formation of upper shadow around 12,040 levels in the last couple of weeks signals an emergence of selling pressure near the new highs. This pattern could possibly result in a minor weakness or a range movement for the next week. Immediate supports to be watched at 11,830."

Market View
Vinod Nair, Head of Research, Geojit Financial Services said," Investors turned to profit booking mode on account of weakness in the global markets as trade war seems to be getting extended which will impact the global markets. Suspense over allocation of ministries and expectation of deceleration in domestic GDP growth also led to volatility in the markets. Profit booking was broad based, however market witnessed strong buying at lower levels which was also supported by strong gains in IT."