Market may be under pressure next week; top analysts say these are the key support and resistance points

In the week gone by, the equity market witnessed volatility and consolidation as rising coronavirus cases globally, US elections and the ongoing September quarter earnings season kept investors wary.

For the week, Sensex fell 2.6 percent and Nifty 2.4 percent.

However, for the month, bulls kept control of the bourses. The S&P BSE Sensex rose above 4 percent while the Nifty50 rallied 3.5 percent in October compared to a 1.3 percent rise seen in the S&P BSE Midcap index, and 0.14 percent gain seen in the S&P BSE Smallcap index in the same period.

The next week may be an eventful one for the market owing to the US elections. September quarter earnings may continue to trigger sector and stock-specific volatility.

Let’s take a look at how top analysts foresee the mood of the market for the coming week:

Dharmesh Shah, Head – Technical, ICICI direct

The weekly price action formed a bear candle carrying lower high-low and closed below the previous weeks low after one month’s 11 percent rally (10790-12025), indicating profit-booking ahead of the key global event of the US presidential election.

Historically, volatility has remained elevated during the US presidential election. During such a volatile phase, we expect Nifty to find strong support around the 11,000-11,200 range which should be held post US election.

Therefore, any dips from here on should be capitalised as an incremental buying opportunity as the medium-term structure remains positive.

Meanwhile, 11,800 would act as immediate resistance as it is a 61.8 percent retracement of the current decline (12,025-11,535), at 11,835.

Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services

The market is likely to remain under pressure, till the overhang of US elections and the surging global cases in Europe continue.

Volatility is also moving upwards from the last four consecutive weeks and needs to cool down for market stability.

Technically too, Nifty has been volatile indicating a tug of war between the bulls and bears. Now it has to cross and hold above 11,750 to get the bull’s grip for a bounce towards 11,900-12,000 while support exists at 11,550-11,500.

US election would dominate the global markets next week alongside Fed and BoE meetings. Apart from this, US non-farm payroll data, as well as PMI data for the US, UK and China, would be tracked by the investors. At 18 times FY22 earnings, we believe markets are now trading closer to its long-period averages and building in a fair amount of earnings recovery in FY22.

For a durable and sustained re-rating, we believe it is critical for corporate earnings to revive sustainably and the COVID-19 pandemic to subside further. Any additional stimulus announcement by the Indian government could help improve market sentiments in the near-term.

Ruchit Jain, Senior Analyst – Technical and Derivatives, Angel Broking

In the midst of all volatile and uncertain behaviour, we managed to defend key levels on a closing basis.

In the forthcoming week, 11,600 – 11,500 has now become an important support zone; whereas on the higher side, if we have to regain any strength, the Nifty has to reclaim 11,760 – 11,800 levels convincingly.

Above this, we may again see the market resuming its northward trajectory.

But as we are stepping into an eventful week, all eyes would be on all these developments, which may probably dictate the near term direction. As of now, since important levels are still intact, we still remain hopeful.

Joseph Thomas, Head of Research – Emkay Wealth Management

The raging pandemic in the US, and the second wave in Europe, and its likely impact on the economy and economic activity, as some of the countries are moving into a more rigorous lockdown, the probable outcome of the US elections and its consequences for the economy and the markets, and the continuing build-up of aggressive postures between India and China, are all factors that are at the heart of the high level of volatility in the equity markets. There may be heightened volatility in the coming week.

Nirali Shah, Senior Research Analyst, Samco Securities

We believe a retest of support of the rising channel on the weekly chart is quite probable in the upcoming week and break down below the support will damage the bullish structure of the uptrend and may trigger a fall up to the next major support of 11,350. Immediate support and resistance in the short term are now placed at 11,350 and 11,750, respectively.

Domestic markets are expected to sentimentally imitate their global counterparts in the coming week especially since the US election is a major event.

Until then, bourses could remain lackadaisical as no considerable delivery based buying or selling is emerging at current levels which likely suggests that markets would remain range-bound.

Buyers could then look for entry points at lower levels in anticipation of sudden knee jerk reactions. In the banking space, the private sector appears well staged to be a part of the next rally as they have managed to cut their deposit rates at a higher pace than their lending rates when compared to their PSU peers.

Investors are advised to keep their shopping list ready for the next week and embrace buy on dips strategy in frontline quality stocks.

Ajit Mishra, VP – Research, Religare Broking

Markets would first react to Reliance industries numbers in early trade on November 2 and then focus would again shift to global cues due to the scheduled US elections.

We advising limiting leveraged positions and suggest keeping the existing trades hedged. Defensives viz. FMCG, IT, pharma, etc tends to do well in such a scenario but the selection of stocks is the key due to prevailing earnings season.

Vinod Nair, Head of Research at Geojit Financial Services

Markets will remain under pressure going forward as political developments related to the US election will act as an overhang amidst higher volatility.

The Supreme court is expected to pass its verdict next week on the much-awaited moratorium case which is expected to be in favour of the Banking sector.

Indian markets are awaiting major economic data points such as Purchasing Manager Index, Banking business data, etc, next week, which are expected to be positive as recovery is seen across sectors.

However, the possibility of a short term correction due to increasing global uncertainties is high.

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