Indian Stock Market Outlook: Epic Research

Nifty forms a shooting star as false breakout traps the bulls on the upside and ended down with marginal gains. A shooting star is a reversal pattern which is characterized as a small body with an upper shadow twice the range of body that indicates the weakness at higher levels and a possible impending reversal.

With Cheers of Budget that brought relief to a large base of honest taxpayers followed by Rate cut decision of RBI; Nifty managed to breach much important 10970 - 11000 mark though it was the profit booking at higher levels and the confluence of resistance levels placed above 11100. A Doji star followed by a falling window on a daily scale has seriously put some dent on the charged bulls.

Derivatives data which saw a huge change on the RBI event has turned upside down and has hinted a cautious stance for any trader seeking a directional move. Short built up is seen on higher strikes of 11100 - 11200 making it a resistance too hard to break in Feb series while lower strikes have seen some long built upon PE side. This is a classic trap for bulls we are seeing. It is very much not a trending market as we have been oscillating in a very short range that is placed between 10600 - 11000.

On the Economic front, with recent events being absorbed in price; we will be looking at a large number of data that are coming in next week. Trade Deficit which is expected to be at 13.80B (USD) will be critical and its level of comfort with the recent surge in crude and depreciation in INR. WPI Inflation; releasing next week; is expected to remain subdued around 3.70%. The industrial output which nosedived to 0.5% previously is expected to come with improved numbers and any disappointment can give a jolt to market.

All this will be eyed. With this, we expect the range to be intact for the coming days. Traders need to be more agile rather than complacent as the breadth on broader analysis still looks weaker. This is basically Index management what we are seeing and the upside is not well supported by breadth.