Wedoany.com Report-Oct 29,  Asian markets are mixed and Nifty futures are pointing to a weak start. Despite Monday’s rebound, bulls have a fight on their hands as the index still faces hurdles on the technical charts. Meanwhile, state-owned banks are back in the spotlight for the right reasons. The market’s strength will be tested further as the earnings season gathers pace, with Maruti Suzuki, Adani Enterprises and Adani Ports due to report results today.

Waaree Energies’ spectacular debut on Monday had buyers bidding up other renewable power stocks as well. Notable gainers included Suzlon Energy. Whether this across-the-board momentum can be sustained remains to be seen. The outlook on the sector is positive, but investors are now focused on valuations and execution risks, and not so much on the order book size. Those concerns are evident from the sluggish performance of most renewable stocks over the past three to four months.

Like renewable stocks, state-run banks too saw a sudden burst of buying on Monday, lifting the Nifty PSU Bank index over 4%. Bulls were charged up by the strong quarterly numbers from Bank of Baroda, Indian Bank and Punjab National Bank. But here too, the trend has weakened over the last three to four months, with the bank gauge down about 19% from its record high in June. That probably is an indicator that the best of earnings growth may be behind for now.

The fiscal second-quarter earnings season has been a wakeup call for die-hard bulls of Indian stocks. And yet, the lackluster economic backdrop of recent months notwithstanding, Nifty Midcap 100 and Nifty Small Cap 250 index components have seen EPS upgrades for the year ending in March, according to IIFL Securities. This suggests corporate earnings may recover soon amid softer interest rates and stable to lower commodity prices, the broker says.

Nifty’s bounce from the relative strength index (RSI) oversold zone could be short-lived amid a slew of resistances. First is the 100-day moving average (DMA) at 24615.92. This has acted as a support during previous falls but the index is currently trading below it for the fourth consecutive session. Second, the broken neckline of the head and shoulders pattern formed over the last month. This usually transforms the neckline into a strong resistance. Lastly, the second highest call open interest for the October series is at 24500. Together, these three factors could be a drag on any technical rebound.