Index Turns Bearish And Volatile, May Head To 11,000 Over The Next Few Weeks

The NIFTY dropped for the second consecutive time last week, putting the bulls on the backfoot for now. Most emerging markets opened weaker on Monday morning, amidst renewed fears that the next round of tariffs from Washington are around the corner.

On the domestic news front, all wasn’t hunky dory last week either. The already beleaguered INR slipped to record lows - hit by weak EM currencies, increases in oil prices, and fears of liquidity squeezes by central banks. The IIP (Index of Industrial Production) growth number, which was reported at 6.9% in June, slipped 300 basis points to 6.6% this month.

On the technical front, we seem to be witnessing a clear retracement of the impressive rally that saw the NIFTY rise nearly 1,700 points since March. On the weekly charts, the bearish momentum reversal pattern is clear for all to see, with the blue line falling decisively below the red. As observed last week too, a reversal to the 20-week moving average (around 11K) is definitely on the cards, but the journey is likely to be a meandering one that will take place over the next few weeks, with severe volatility along the way.

In the short term, we may see the NIFTY heading towards 11,300 or below this week, so a short-term bullish trading play appears to be fraught with risk.

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