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Share prices to face resistance at higher levels

Indian markets could open steady to up on Monday continuing with their recovery of Friday, aided by the gains in the US markets. However, they could run into stiff resistance at slightly higher levels as the negatives facing the world markets and the local economy continue. Healthcare, consumer goods, media and IT (being the traditional defensive sectors) could outperform while the cyclical sectors including banks, metals, capital goods, etc, could run into another round of profit taking. Smallcap and midcap stocks after being hammered last week could see some bounce but this may not last long.
The global markets faced a number of headwinds including conflict in Syria/Iraq, Russia-Ukraine issues, slowdown in China, rising US Dollar, slowdown in Japan (despite all steps taken by the Government over the last few quarters), Euro zone economic slowdown, etc. While the global markets are still in a sanguine mood and tend to discount a single negative in 1-2 days, how long will this continue is the question?
Indian markets after the scare created over Tuesday to Thursday, recovered on Friday after Standard & Poor’s raised the outlook for India’s “BBB-minus” rating back to “stable” from “negative,” saying PM Narendra Modi government’s “strong” mandate would allow him to implement fiscal and economic reforms. S&P had cut India’s rating to “negative” in April 2012. Despite this recovery markets declined in the week gone by with the Nifty breaking its recent lows of 7925. Week over week the Nifty lost 1.9 per cent.
Technically, with the Nifty now in a downtrend, traders will need to watch for a break below the immediate supports of 7842 for a continuation of the downtrend. Any pullback rallies could find resistance at 8070-8121 levels. HDFC Securities Ltd

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