Market volatility is likely to continue

K. ARAVIND

The week ending August 28 was bullish. Market observers believe that the market is likely to move forward if there are no unforeseen events. But something unexpected happened on the first day of last week. Reports by the Foreign Ministry that Chinese troops had moved across the border led to a sharp drop in the market.

The Nifty fell below 11,400 points, reaching close at 11,800 on Monday. Normally, when there was such a decline it had to go back due to the strong upward trend prevailing in the market. But the volume of trade in the market was significantly lower — preventing such a surge. The new rule is that the margin will be available only if the investor is asked to mortgage the securities. As a result, the current shortfall in margin availability has adversely affected trade. This prevented a strong rise from the low level.

The market was volatile last week. This situation is likely to continue as the low volume trading pattern will continue into next week. Low volume adversely affects the market trend.

Global indicators also weighed on the market. Strong selling pressure on technology stocks on Thursday sent US markets into a tailspin. This was also reflected in the Indian market.

Earlier, the Nifty broke its resistance at 11,377 points. The market went down after breaking this level last week. The next support is at 11,100. The market is likely to go through strong volatility next week as well.