Last week, the Nifty, after hitting a resistance level of 12,000 points, faced selling pressure. Essentially it started with a high level of profitability.
As 12,000 points was an emotionally defensive level, investors were willing to book small profits at that level. IT and pharma stocks and Reliance Industries gained on the back of gains in the market. But then, following global indications, the Nifty plunged to around 350 points.
Concerns over COVID-19’s second wave in Europe have led to a sudden sell-off in global markets. There are reports that curfew is being declared in France and lockdown restrictions are being tightened in other European countries. In addition, the conflict between China and the US in the South China Sea has added to market sales pressure.
The adjournment of the hearing on the petition seeking an injunction restraining the charging of interest during the moratorium period has led to a slight rise in banking stocks. But it did not last long and banking stocks were subject to strong fluctuations.
Favourable factors for the market are the possibility of increased sales during the festive season and the increasing number of COVID healers. At the same time, market uncertainty is likely to remain until the US presidential election.
As long as the Nifty stays below the critical level of 11,800 points, the market is likely to remain weak. The next support level is at 11,550 points. The defence is at 12,000 points. The market is likely to trade within this level for a while. The market is likely to fluctuate sharply. Therefore, investors need to be careful.