The domestic equity market tried to break the hard ceiling of 12,100 level during the week, but in spite of RILs above-average performance, Nifty couldnt break this magic mark.Nifty Smallcap index clearly reflected the current state of the market, which is in a corrective phase since the beginning of the month.
The current correction conclusively proves that a bigger uptrend is still ahead and this is just the first correction after the corporate tax rally.
The market is undergoing sectoral rotation and the auto sector is awaiting an up-move once there is some clarity on the scrappage policy.At the same time, the governments non-strategic disinvestment in listed companies might create selling pressure in the near term.
It is better to avoid the disinvestment bandwagon from a trading and investment perspective.On the international turf, US markets seem to be hovering near lifetime highs and are unperturbed by political skirmishes, given the fresh testimonies, proving that the US President might have misused the power of his office for political gains.
Eventually, this may lead to his impeachment, but the overhang till that time may keep the US and world markets on the tenterhooks.Event of the WeekTelecom players, once considered untouchables, have sprung back to life though management and business realities are still very bearish given the accumulated losses and huge debt that might take a very long time to come back to healthy levels.
Turnarounds happen overnight in the market, at time when the ground reality is different and, therefore, this sector will emerge as the biggest underperformer for weeks to come.
Traders and investors may place bearish bets accordingly.Technical OutlookNifty50, Nifty midcaps and smallcaps are clearly forming a corrective pattern along with majority sectoral indices, which are also moving sideways.
Trading in such a phase can cause whipsaw losses, which will all the more confirm that a correction is under way.
Midway through the week, Nifty50 made a Doji with over 30 per cent increase in volume in cash market, which further confirmed that FOMO buying is over.
Traders should ideally avoid trading during such low volatility corrective phases.Expectation for the WeekThe market is likely to remain lackluster in the coming week.
It will see movements based on news and events that are likely to transpire from the government in terms of economic policies, disinvestment and international geo-political events.
In the short term, the bourses would over-react to news which can make contra-betting a profitable proposition.For instance, the real estate package announced a few weeks earlier has thereafter led to a decent correction in realty stocks taking them even lower.
This provides good contra investing opportunities.
Statistically, November is a bullish month, but the month-end going ahead looks rather quiet and dull.Nifty50 closed the week at 11,914, up 0.2 per cent.