Index Outlook: Indices hit the pause button

It was a subdued week for Indian and most global markets with the exception of the US markets. Almost all the global indices ended on a flat note last week. While the Dow Jones and S&P 500 jumped 2.8 per cent and 2 per cent respectively, the Hang Seng index fell 3.3 per cent.

The Asian markets slumped on Friday after the US Fed left interest rates unchanged in its recent meeting. But the Fed remained on track to progressively tighten borrowing costs, due to the underlying strength in the economy.

The fall in crude oil prices to ₹60.19 per barrel is cushioning the global equity markets. This week, macro economic data such as IIP, CPI and WPI will provide direction to domestic market. The rupee movement and price action of crude oil also need to be observed.

Nifty (10,585.2)

Following a sharp rally, the Nifty 50 paused in the truncated week. The index added 32 points or 0.3 per cent. It currently tests the resistance at 11,600.

 

Short-term trend: The short-term trend has been down for the Nifty index since recording an all-time high at 11,760 in late August this year. But the index took support at the key base level of 10,000-mark and reversed direction, triggered by positive divergence in the daily indicators. While trending up, the index surpassed its 21-day moving average, which is the initial sign of trend reversal, and hovers well above this average. That said, it is testing a key medium-term resistance at 10,600 which it failed to surpass in mid-October.

A corrective decline from the current resistance can trigger a minor decline and find support at 10,400 and 10,300 in the short term. Only a further fall below 10,300 will strengthen the downtrend and drag the index once again down to

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