As expected, a late F&O related sell-off dragged the Nifty below the psychological 200-DMA mark. Looks like the start today could be on a subdued note. A lot of technical levels are doing the rounds – which tends to happen when the market is weak or even in a rally mode.
The near-term outlook for the Nifty is weak with the intermediate support seen at around 5565. The next important support level to watch out for is 5500. A few are even talking of 5300-5350. Though there is no immediate cause for alarm, the fact remains that the undertone is fragile after successive selloffs since Diwali - when the main indices almost hit new record highs. There are a few macro-economic headwinds confronting the Indian markets and things may take a while to stabilise.
The sentiment may continue to be undermined by persistent FII outflows, which in turn could hit the rupee. Inflation has to moderate substantially for any material turnaround to happen. The Government too needs to pull up its socks.
