Mixed signals from the Indian market - what lies ahead ?

Last week, Indian markets sent out mixed signals, making the near-term outlook uncertain.

A Reverse Hammer formed on the Nifty Futures daily chart last Friday, which also qualifies as a buy failure—a strong sell signal. Notably, this was the second close below the previous pivot low of 7th November, which is clearly not encouraging for the bulls.

Nifty Futures daily chart showing a Reverse Hammer closing below support

However, Bank Nifty tells a different story. It posted a clean 1-2-3 bottom breakout on Friday, giving a strong buy signal. Nifty IT also looks positive, breaking out of a double bottom pattern with a large bullish candle close.

Banknifty Futures daily chart showing a bullish breakout above a 1-2-3 Bottom pattern

Nifty IT index daily chart showing a bullish breakout above a Double Bottom pattern

Meanwhile, Midcap and Smallcap indices remain weak, closing in line with Nifty and offering little support to the broader market. With key indices moving in opposite directions, the market direction remains unclear for now.

Adding to the uncertainty, US markets were largely range-bound last week, offering no strong cues either.

DJIA Futures daily chart showing a rangebound price action for the last 8 trading days

In short, there is a clear lack of alignment across markets, and conviction is missing. For now, it’s best to stay cautious and let time tell what happens next.

Please scroll below to subscribe for regular updates on the Financial and Commodity markets.