Sensex Weekly chart:
Sensex showed strong bounce back after making a low near 25910 levels on 17th October. This can also be attributed to the announcement of another reform of diesel price deregulation along with outcome of Maharashtra and Haryana state elections with BJP leading in both the states. This will help the central government to put further reforms on fast track. On the day of Diwali Muhurat trading Sensex inched closer to 27000 mark whereas Nifty managed to close above psychological 8000 level.
Monitoring Global growth will be important: IMF in its latest World Economic Outlook has raised concerns about slower than expected growth in developed economies due to high debt burdens and unemployment. It will be important to keep an eye on global growth going forward along with other macro-economic factors.
High Gold and Silver imports: The imports of precious metals have sharply increased in September. This has been a concern since reduction in Crude prices has still not helped the country to reduce its current account deficit (CAD) which has widened to record high levels. The rise in Gold prices from here on can further put pressure on CAD and government will be forced to take action to keep this under check.
The results have been mixed bag so far with a few stocks like TCS (NSE:TCS), HCL (NSE:HCLI) that did not live upto the expectations showing sharp selloff. On the other hand Oil and Gas sector stocks like HPCL (NSE:HPCL) Bharat Petroleum Corp. Ltd. (NSE:BPCL) showed good uptrend after diesel price deregulation announcement. Bank Nifty index has managed to touch new highs at 16500 levels but Infra, Power and Metal index has still not shown any meaningful recovery. To sum it up it is a mixed signal and the sector specific activity can continue unless a strong trend emerges in either direction.
Week ahead: Overall, Sensex has managed to form a positive weekly bar which is keeping the short term trend positive. On upside break above the previous high near 27350 will be crucial and on downside recent low formed near 25900 will be an important support. 100 days Simple Moving average which provides the direction of medium term trend is also near 26000 level. So for positive trend to continue this level should be protected. However, given the sharp selloff seen in a few European markets over past few weeks and concern raised by IMF it will be important to use good risk and money management strategy in case there is reversal.