Market Insights: Navigating weakness and opportunities across sectors
ET Now: But tell us, is it a big worry given the kind of levels we are seeing now? What levels are we vulnerable to at this stage?
Rajesh Palviya: The 200-day moving average is closely followed by most traders and investors. Breaking this level for the second time in a one-month timeframe adds to the cautiousness in the market because it signals an inability to sustain above this critical support level. We first broke it in November, and now we are back below it again.
Looking at the broader market intensity, we clearly see signs of weakness. None of the sectors are holding ground, and most large-cap stocks are under supply pressure. The recent decline in stocks like Siemens and other capital goods companies highlights this cautious sentiment as macroeconomic concerns persist.
If we fail to sustain above 23,800, the next downside level to watch is 23,350, which was tested in November. This indicates a continuation of weakness. For now, the strategy remains sell-on-rise, even though we are in an oversold trajectory. The selling pressure from FIIs is preventing any significant pullback despite oversold conditions.
The put-call ratio also indicates we are in an oversold zone for both Nifty and Bank Nifty, coinciding with the December monthly expiry. This marks the third consecutive month of declines. If Nifty breaches 23,800, we might see a recovery, but staying below this level opens further downside toward 23,350.
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