Nifty's Downward Trend: A Buying Opportunity in Sight?

Market Synopsis:
Nifty concluded the week with a decline of 0.44%, primarily driven by losses in the auto, IT, and metal sectors. The market faced pressure from rising domestic inflation data with statement given by the RBI regarding inflation moderation and continued selling by foreign institutional investors (FIIs). Additionally, quarterly earnings from major companies did not meet expectations, further contributing to the downward trend. This week was characterised by range-bound trading due to mixed domestic signals.

In a significant development, Hyundai’s IPO attracted minimal interest, achieving only a subscription rate of 0.48 times among retail individual investors. The India VIX, which measures market volatility, decreased by 1.38% to close at 13.04 for the week.

Looking ahead, the upcoming week is expected to be crucial for the market as it will determine whether the current downward trend will continue or if the market has reached its bottom. The price-to-earnings (PE) valuation of the Nifty index appears fair at present. If the market begins to trend upward and foreign institutional investors regain confidence, current levels could present a strong buying opportunity.

Top Gainers:
● Wipro (+3.85%)
● ICICI Bank (+3.39%)
● L&T (+2.74%)

Top Losers:
● Bajaj Auto (-15.26%)
● Nestle (-6.43%)
● Trent (-5.67%)

Major Market Developments:
● M-Cap of 4 of top 10 most valued firms jumps Rs 81,151 cr last week; ICICI, HDFC Bank biggest gainers.
● HDFC Bank to sell up to Rs 10,000-crore shares in HDB Financial IPO; total public issue size at Rs 12,500 crore.
● Kotak Mahindra Bank Q2 results: Net profit rises 5% to Rs 3,344 crore, misses market estimates.
● Gold prices retreated from record highs in the national capital on Tuesday, declining by Rs 50 to Rs 78,650 per 10 grams following fresh selling by stockists and retailers.

FII & DII Activity:

FII activity (Foreign Institutional Investors):
● 14th October : -3731.59 Crore
● 15th October : -1748.71 Crore
● 16th October : -3435.94 Crore
● 17th October : -7241.40 Crore
● 18th October : -5485.70 Crore

DII activity (Net Cash):
● 14th October : 2278.09 Crore
● 15th October : 1654.96 Crore
● 16th October : 2256.29 Crore
● 17th October : 4979.83 Crore
● 18th October : 5214.83 Crore

Technical analysis:
The market has continued to decline after reaching last week’s high. It is now making lower highs and lower lows. Although it broke below last week’s low, it couldn’t maintain that position on a four-hour chart. Currently, the market has formed a double bottom pattern and is trading in a high liquidity area. The trendline resistance is around the 25,000 mark, which will be crucial for determining the market’s direction. Support is found in the 24,600 to 24,550 range. The Relative Strength Index (RSI) is at 48, indicating that the market has recovered from being oversold and may be on track for an upward movement.