Markets resilient; Nifty eyes 10500
The anticipated correction remained elusive on the bourses last week. Although marginal dips were witnessed, a major correction has not yet panned out on the back of fluid fund flows. The markets continued to touch fresh historic highs last week amidst stock-specific action. The news of India jumping 30 ranks in the ease of doing business perked up the market sentiment.
The FIIs remained net buyers in the cash and derivatives segments. However, the DIIs turned sellers during the week. The breadth of the market remained positive amidst high volumes, which is a positive sign for the markets. The earnings season has largely been in line with expectations. Crude oil prices inched higher moving close to the two-year high with Brent crude price surpassing as the outlook remained upbeat as the OPEC-led supply cuts have tightened the market and drained inventories. The Bank of England raised interest rates for the first time since 2007, from 0.25% to 0.5%. Technically, the prevailing positive technical conditions helped the markets touch fresh historic highs. The Stochastic, MACD, KST and RSI are all placed above their respective averages on the daily and weekly charts. Moreover, the Nifty is placed above its 50-day SMA, 100-day SMA and 200-day
SMA. The Nifty’s 50-day SMA is placed above its 100-day and 200-day SMA, its 100-day SMA is placed above its 200-day
SMA indicating a ‘golden cross’ breakout. These positive technical conditions could lead to regular buying support.
The prevailing negative technical conditions, however, still hold good. The Stochastic and RSI are placed in the overbought zone on the daily and weekly charts, which could lead to intermediate bouts of profit-booking and selling pressure especially at higher levels.
The +DI line is placed above the ADX line and the -DI line and also above 30 on the daily chart, which indicates that the buyers are gaining strength. The ADX line is still languishing around the 22 mark, which indicates that the current market trend lacks strength and a choppy trend is likely to pan out.
Though the markets witnessed odd days of marginal correction, the Nifty managed to sustain above the 10400 mark. This smart resilience against profit-booking and selling pressure was due to the fluid fund flow situation viz SIP money and FIIs turning buyers in the cash segment. It is important that the Nifty consolidates above the 10400 level for followup buying support to emerge and in order to test the 10500 mark or move higher. Intermediate bouts of profit-booking and selling pressure are likely due to overbought conditions.
On the downside, 10124 remains an important support level followed by 9955, which is also a crucial support level.
In the meanwhile, the markets will take cues from the earnings season, global markets, Dollar-Rupee exchange rate and crude oil prices. Technically on the upside, the Sensex faces resistance at the 33750, 34000 and 34500 levels while it seeks support at the 33300, 33000, 32325, 32000, 31610, 30921, 30680 and 29365 levels. The resistance levels for the Nifty are placed at 10462, 10500 and 10575 while its support levels are placed at 10400, 10325, 10270, 10200, 10138, 10100, 10000, and 9955.