The market has seen stupendous run over the past couple of months without any major correction. Last week, we finally saw some pause in this ongoing optimism. The first half can be considered as a part of consolidation wherein some encouraging signs were seen on Wednesday as the hopes were built for yet another rate cut by the Reserve Bank of India (RBI). However, on Thursday, the traders’ fraternity looked disappointed after the RBI maintaining its ‘status quo’ on its repo rate. This resulted into a decent decline on the following day as well to register the weakest week in the last two months.
Clearly, last week’s tail end correction was a bit unexpected. But since the outcome from the policy was not on expected lines, such reaction was evident. The index is now standing at a crucial juncture and the trend for the forthcoming week would be decided by the price action in first couple of days. For the Nifty, the sacrosanct support is placed in the zone of 11,883 – 11,850. If Nifty slides below these level, we may see extension of the profit booking towards 11,750 – 11,700. So, by no means, this is a trend reversal; rather we would construe this as a healthy correction before resuming the uptrend. On the other side, if the Nifty manages to hold the support zone and starts staying beyond 12,000, it would negate the possibility of extended correction and then the index can continue its upward trajectory towards 12,100 – 12,160.