Stay cautious while investing

After six weeks of rally, markets started slipping on Wednesday, but managed to recover a bit by end of the week. However, the structure is still giving mixed clues for the near future. The fall in the first three days of the week is steep in nature and with huge distribution.

It looks like the market made an intermediate top at 11,760. On technical front, market made three consecutive Hammers, confirming correction is done for the short-term. The dilemma is not so vague in weekly charts, where a clear Bearish Engulfing pattern formed on lifetime highs. Generally, on longer-term charts, this pattern gives very bearish signals to the participants.

It is not only the Bearish engulfing, it is confirming up of last week’s Shooting star kind of pattern and It is also Hanging Man for the current week. All these are bearish patterns only. Also, negative divergences are still intact. One thing is certain.

The current uptrend is under pressure. The crucial supports for Nifty are placed at 11, 450- 11,400 range. Below this, the market will drift further down to a level of 11, 300. If the market sustains the bullish momentum and crosses 11, 700 level, the new lifetime highs are possible.

The dollar revenue sectors like pharma and IT are still outperformers in the broader market. Even the negative news flow in Sun Pharma counter does not impact as much as earlier it did. This shows the strength in the sector. As we said earlier, build a portfolio with dollar revenue focused companies.

On the fundamental side, there is no respite for rupee fall and rise in oil prices internationally and petro product prices domestically. The foreign currency reserves declined with RBI intervention to rescue rupee.

CAD for the first quarter still high at 2.4 per cent of the GDP. Global trade war is worsening day by day while currencies in emerging markets are melting. With these factors, the stock markets across the globe are facing a risk of a bigger threat than visible. So, be cautious while participating in the stock markets as risks are certainly rising