INDEX PREDICTION FOR DIWALI WEEK 2021

Indian stock markets fell sharply today 29 October 2021 with Sensex slumping over 700 points to settle at 59306 while Nifty dropped nearly 200 points to 17670. Banking stocks led the decline with SBI, HDFC Bank, ICICI Bank, Axis Bank and Kotak Bank falling between 3% and 4% while ITC slumped over 5%. India's benchmark stock indexes have risen more than 25% this year, driven by massive liquidity and huge retail participation, raising concerns of overvaluations.

Relentless selling by FIIs is a key reason for this correction in the market.  FIIs had sold over ₹10000 crore in Indian equities in past five sessions.

There is some exuberance in terms of valuations in certain pockets of the market. In some pockets, there is still money to be made, which will see some sectoral churn.

The broader markets too were under selling pressure with BSE midcap and smallcap indices down about 1.5%.

We are seeing the first meaningful correction in the market where Nifty has slipped below its 20-DMA that has opened the door for further downside where rising 50-DMA will be the next support level that may coincide with gap area around 17600 level while below this, 17400-17200 will be the next support zone. On the upside, 18100-18300 has become an immediate supply zone.

Inflation and slow down in global growth momentum are other concerns amid expensive valuations. The rise in fresh covid cases in some of the countries is also disturbing the mood of the investors. We are in a structural bull market where intermediate corrections will be a part of this journey and these kinds of corrections will provide good buying opportunities in quality stocks. 

The banking sectoral index Nifty Bank today fell 400 points to 39443.

Banknifty is also showing signs of topping out from the 39000 level. On the downside, 38500 will be an immediate and important support level that may coincide with rising 20-DMA; below this, we can expect further weakness towards 38000-37000. On the upside, 40000-41000 will act as a strong supply zone.

Adani Ports is abandoning its plans to build a container terminal in Myanmar, pushing shares down about 7% today.

We expect the market to be volatile in the coming weeks and we expect selling pressure to continue in the broader market. We suggest investors be cautious on the market, look for profit booking and avoid buy on dip strategy. The global cues were also weak. Shares slipped today in Europe and Asia after a retreat on Wall Street pulled the S&P 500 and the Dow Jones Industrial Average back from their latest record highs. Globally investors are on the edge awaiting the US GDP data releasing later in the day along with the outcome of the Fed meeting scheduled for next week.