Is the Nifty going to break below November lows next week?

As the year draws to a close, the ongoing speculation among market watchers would probably be whether the Nifty 50 index would breach its November lows over the coming week. What with all the recent declines and technical signals pointing in the direction of possible market weakness, investors are on the lookout.

The Nifty has continued to gyrate this month, having already closed lower and reflected a predominantly bearish trend. Technical analysts have been watching the index carefully along the lines of its movement around the November lows, which hovered just around 23,263 points. While not everyone is on the same page here, some experts think the Nifty can, in fact, fall back to those levels; breaking them down immediately into the future seems implausibly likely for the time being. Interested in Anand James, Geojit Financial Services, suggested that it is possible for the said compression to take place, although immediate projection for a sharp fall through these levels does not seem plausible for the near future.

With all these factors including the last evidence before the curtains of 2006 come down, poor market sentiment has just witnessed the Nifty forming a bearish candle on the weekly charts, having fallen below its 200-day moving average, signaling that pressure is going to be further piled on markets. However, according to James, this may just be a sideways movement for some time followed little later by consolidation and then a significant actual move that took place thereafter. 

That said, these overall negative sentiments are mitigated by the positive performances of certain sectors, as IT has shown some strength among all. The Nifty IT sector recorded a decent gain for the month of November, thereby giving an impression that there could be some stocks that would continue to rise even in the face of storms created by the broader markets.