Index trend and stocks in action November 25, 2019

Last week, India’s benchmark indices kicked off the week on a lackluster note. However, as the week progressed markets picked up movement and, on Wednesday, the BSE Sensex logged a fresh all-time high while the Nifty 50 register a fresh swing high of 12,038.60. It looked a bit tentative at higher levels, and a weak market breadth let the bears' foot in the door. But Wednesday onwards, the Nifty formed back to back bearish candles, with lower highs and lower lows on Thursday and Friday.

All said and done, the Nifty ended the week with a marginal gain of 19 points or 0.16 per cent on a WoW basis. This was the third week in a row when the Nifty has not been able to move past its crucial resistance area and ended the week on a flat note. Moreover, the weekly chart now depicts three back to back ‘Doji’ candles. Usually, the formation of a Doji after a reasonable up move or a down move is a sign of an alert for a trend reversal. Hence, a hat-trick of Doji, that too, on a weekly time scale is making the continuity of the bullish bias in the markets a little suspicious. At the same time, the index is not giving up the level of 11,800, which is keeping the hope alive for the bulls.

The Nifty has been trading in a range of 240 points over the past three weeks. It was at least 5-6 times in the last three weeks, that the index attempted to overcome the all-important psychological mark of 12,000 on a closing basis. Although it did manage to do so on November 7, but with a bearish formation on the charts. The correction at the tail-end of the week dragged prices near to its crucial 13-EMA support on the daily time scale. In the last one month or so, it is about the fifth time the price haven taken support around this crucial moving average. In the coming week, if prices wreck below the 13-EMA then the initial target would probably be 11,800 levels, which is the lower end of the range in the last three weeks and the fight between the bulls and bears would be interesting to watch around these levels.
 
For the next few days, this area of support (11,800) is critical for the market. Structurally, if the Nifty closes below the 11,800 mark, it will have a downside implication of about more than 200 points. Whereas, on the upside, the index needs to penetrate above the 12,040 mark convincingly to reignite the uber strength of the bulls.

Combining the evidence from the charts and technical parameters, it is clear that there has been a loss of momentum in the index, which has halted its up move at the moment. Nonetheless, only time would tell whether it is just a time consolidation after a V shape rally or it is preparing for some corrective moves. However, as long as 11,800 levels are intact, we believe it would be better to be with the bulls. The coming week is going to keep market participants glued to their trading screen as we have the monthly F&O series expiry on Thursday, followed by the release of second-quarter GDP numbers and the output of eight core industries on Friday. The outcome of key macro-data could dictate the trend of the markets in the near future. All in all, the coming week is filled with all the important ingredients for it to be a perfectly volatile week.

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