Markets re­silient; Nifty eyes 10500

Money Times - - Front Page - By San­jay R. Bha­tia

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.

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