India Markets 08-Jan-2020: US-Iran conflict weighs on Indian market

Key points for the week:


  • Following assassination of Iranian general by USA last week, Iran indirectly issued nuclear threat, sending #NIFTY down by almost 2% on Monday 6th Jan

  • On Wednesday 8th Jan early morning, missile strikes by Iran on US military bases in Iraq has sent the world in panic mode, with S&P in CME Globex losing over 1.5%, only to recover it sharply in a couple of hours.

  • In that context we can expect weakness in NIFTY at open


While the US market has been in a bullish mind in spite of possible conflict with Iran, the Indian market took a major hit from start of the week, losing 1.9% before partial recovery on Tuesday.


DAILY PRICE CHART NIFTY50 INDEX


NIFTY has broken below a recent trend (trend-line), but as of now that is not a compelling reason to consider it as a reversal. There are many areas of demand along the way to provide support before a downtrend can be conclusive. We can see some significant correction if the 11500 – 11600 level is broken.



In the weekly picture we see NIFTY is in an upward channel that originated in 2016.


WEEKLY PRICE CHART NIFTY50 INDEX


For the big picture trend to be broken, the market needs to break down below 11000. For now there are no signs of weakness to that extent.


In that context every pullback to lower demand area becomes a buying opportunity, though these opportunities should not be considered as long term buy or buy to hold positions. Such buy zones are only for short term trades that would last for weeks. These are only speculative moves. Fundamentally, we believe Indian economy is still passing through difficult phase, with every possible economic indicator is showing weakening economy. We shall have a different post on Indian fundamentals soon.


Outlook for India Markets (NIFTY) ahead


In the next one or two trading session(s), the market is likely to test 11900 support area. We expect it to hold and rally from there. However if that level is breached (NIFTY drops below 11800), then it would be

eyeing 11600 level.



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