Party over for small & midcaps? Aamar Deo Singh of Angel One decodes trends

economictimes.indiatimes.com:

Overall the midcap and the smallcap indices closed in the green last week; however, the advance-decline ratio is slowly changing in favor of the declines, indicating sell-off and profit booking in the broader market, says Aamar Deo Singh, Head Advisory at Angel One. Given the current volatility, profit-booking should be looked at, given that opportunities for fresh entry would emerge in coming weeks, he adds.Q: What are your expectations from Nifty next week after a dull week with 0.45% net weekly declines? Last week, markets continued to witness selling pressure, with the indices closing in the red for the 3rd consecutive week.

Weak global cues amidst inflationary concerns, with profit booking at higher levels, continue to weigh upon the investor sentiment. Most of the leading Nifty heavyweights, with the exception of Reliance Industries, ended in the red.

Next week, markets will keep an eye on the retail inflation numbers for July, expected to be higher than RBI’s maximum tolerance level of 6%. If inflationary uptrend persists for a few more months, RBI might be forced to relook at its interest rate pause policy.

So, markets are expected to remain volatile, with 19,200 to act as crucial support for Nifty.Q: What are the technical triggers for Nifty, Bank Nifty?Both Nifty & Bank Nifty continue to trade with a negative bias, as most technical indicators clearly point towards a short-term downtrend. Bank Nifty saw a sharper fall as compared to Nifty last week, with Reliance & IT stocks somewhat cushioning the Nifty from a steeper fall.

The bear camp continues to have the upper hand over the bulls, evident from the sell on rallies being witnessed during the past few trading sessions. For Nifty, 19,000-19,200 is a crucial