Mumbai: The market is likely to cheer the breakthrough in the trade war front as stocks may rebound from the deeply oversold zone.
The improved geopolitical situation along with expectation on the government coming out with some more measures to spur economic growth should set the momentum for the market.
Investors will be critically looking at industrial production data and the manufacturing output numbers, followed by inflation figures. Any number above expectation should be good for investors. According to analysts, selling should be avoided at this point while one should look for a directional breakout from the current range.
“The new-found love of the government to address concerns of the economy through its weekly press conferences should also lead to some confidence building in the sentiments. These press conferences will be closely watched by market participants as they expect economic boosters. Therefore, we recommend investors to accumulate quality stocks in metals, Private and PSU banks for a medium-term perspective as they are highly oversold,” Jimeet Modi, Founder & CEO, Samco Securities said.
“The Nifty has a made a hammer for the last two weeks, indicating a refusal to go down further. Given the consolidation stage of the market, the Nifty50 is again on the verge of testing 11200 on the higher side and will face resistance at around 11350 levels being 50 per cent retracements of the entire fall. Traders should buy on dips for nominal profits as the market will witness profit booking at higher levels,” he further said.
Analysts said the Hammer pattern on the Nifty indicates a reversal is on the way. Amid its prolonged consolidation within a range of 10800- 11000 for a third consecutive week, a hammer pattern signifies or gives a caution for an upcoming reversal, especially, when formed on a weekly scale.
The global markets have seen a rebound as China and the US agreed to resume trade talks in October and this was one of the main factors we have seen a sharp recovery in crucial indices such as S&P, DJIA, and HSI. Many of these indices have come out of the recent short- term base formations.
On the domestic front, markets have been sustaining lower levels as the Finance Minister is expected to announce some measures after the previous week's bank consolidation moves. Markets are expecting any move that can actually address the concerns in the automotive industry and real estate space. Any measures would bring a lot of improvement in sentiments.
“The volatility we have seen which was up in the previous week is cooling off, while, studying options data suggest we may be in a range of 10800-11100. Any close above 11100 would call in the buying in broader space that can push Nifty ti 11400 - 11450,” said Mustafa Nadeem, CEO, Epic Research.