Market wrap-up: ‘Bears, Bears, Everywhere; Nifty Auto and PSU Bank become top losers WoW, Nifty Pharma emerges as the only sector to end week in green!

On the weekly chart, the index has breached the 20-weekly moving average while the RSI marked a fresh 14-week low. 

Market wrap-up:The Indian benchmark indices witnessed one of the scariest falls on Friday as Nifty and Sensex fell by nearly 3 per cent each.  

Overall, the advance-decline ratio was in favour of declines.  

On a week-on-week (WoW) basis, Nifty lost more than 4 per cent while on the weekly timeframe, it has formed a bearish candle with its opening and closing being near the highest as well as the lowest point of the week, respectively. Moreover, on the weekly chart, the index has breached the 20-weekly moving average while the RSI marked a fresh 14-week low.  

Going ahead, the level of 16,700 is likely to act as strong support in the near term.   

Among the sectoral indices, except Nifty Pharma, all other indices ended in the red. Nifty Pharma ended up by over 1.5 per cent on Friday while on the weekly basis, it gained 2.34 per cent. On the daily basis, Nifty Realty and Metal lost the most. On a weekly basis, Nifty Auto and Nifty PSU Bank lost the most.  

Market update at 1.15 pm:  It has been a volatile day for Nifty so far, making swings in either direction. It is evident from the fact that India VIX is up by 16 per cent. Nifty made a sharp recovery from 17,100 of about 100 points but the selling pressure still persists. Every index except Nifty Pharma is facing the heat as the concern over a new variant of Coronavirus is increasing.  

The top gainers’ list includes pharma stocks such as Cipla, Dr Reddy's Laboratories, and Divi’s Labs while JSW Steel and Tata Steel are the top losers.  

The level of 17,100 will be keenly watched today as the closing below this level would confirm the bearishness of Nifty for the coming days.  

Stay tuned for more such market commentaries! 

Market Update at 11:00 AM: The new variant of Coronavirus has certainly spooked the market participants across the globe. The concern is so alarming that no market is spared of this fear. Talking about the Indian markets, it is down by over 2 per cent and also, marked a fresh swing low on Friday by slipping below the 17,200 mark.   

As per UK officials, the new Coronavirus variant has a spike protein that is dramatically different from the one, which vaccines are based on, raising fears it could evade the immune response reported by early reports from the media. 

As a result, huge selling pressure is being witnessed in the hotels, travel & entertainment stocks. The stocks of Indian Hotels Company Ltd and PVR Ltd are down by over 8 per cent each.   

Dow Jones Futures is also down by over 1.29 per cent, which adds fuel to the fire.

Market Update at 9:50 AM: Indian benchmark indices were seen trading with losses of over 1.20 per cent on Friday morning. The advance-decline ratio is strongly in favour of decline as 46 stocks of Nifty 50 were seen trading in the red while only four stocks were trading in green.   

Dr Reddy’s and Cipla were the top gainers as both gained nearly 3 per cent while Nifty Pharma was the only sector that traded in green with gains of a whopping 1.87 per cent.  

On the other hand, the top losers among the sectoral indices are Nifty Realty and Nifty Media. 

On the expiry day, the stock of Reliance Industries gained over 6 per cent, which helped Nifty to close in the positive territory. Nifty went up by 121.20 points or 0.70 per cent today. Banks, financial services, and the auto indices were the only losers in today's market. On the other hand, Nifty Energy emerged as the top gainer with gains of 2.4 per cent. Realty, Media and pharma indices inched higher by 1.18 to 1.95 per cent. All other sectoral indices were able to register moderate gains.  

The equity market has clearly given bearish signals. On the monthly chart, the benchmark index closed below the prior month's low and formed lower high and lower low a bearish engulfing pattern after April. This is the third such candle since the rally of April 2020. On the weekly chart, Nifty closed below the prior swing low. Though it breached the rising channel support, on Monday, it managed to move above the support level. The benchmark index is trading below all the key moving averages. The 5-EMA acted as resistance for the second successive day. The index failed to close above the prior day high after a short-covering bounce on Tuesday. The 38.2 retracement level (17,595) and the prior day high of 17,600 are important resistance zones. 

A close above 17,600 will be a positive technical factor for the day, and it can test the levels of 50 per cent retracement (17,713) as well as 61.8 per cent retracement (17,830), which are the next targets. Nifty already made two lower tops and lower bottoms, which is a bearish sign. Unless it closes above the prior swing high of 18,210, we cannot be bullish for the short to medium term.

The FIIs sold Rs 25,338.63 crore on a MTD basis. Last month also, they sold Rs 25,572.19 crore, which indicates a huge profit booking. As there are only three trading sessions in this month, if Nifty fails to close at least above the 17,672 level. Otherwise, we can assume that the level of 18,604 is the intermediate top.

The rollovers in Nifty are very low and its below the three-month average rollovers and also, below six-month average. The lower rollover indicates the lack of conviction on the trend.