Institutional money fuels rally Nifty sights 11K
The markets rallied smartly last week on the back of institutional buying support, which also led to short-covering during the F&O expiry week. The fall in crude oil prices and the strengthening rupee against the green buck helped improve the market sentiment. The breadth of the market remained negative amidst high volumes, which indicates concentrated buying in key pivotal and index stocks.
The FIIs turned net buyers in the cash as well as derivatives segment. Moreover, the DIIs were seen buying regularly and remained net buyers during the week. Global markets remained volatile as the US Federal announced that interest rates were almost at the top of the rate curve. Oil prices firmed up on Friday on expectations that OPEC and Russia will agree to some form of production cuts next week although swelling US supplies kept the markets in check. On the domestic front, the final leg of state elections in Rajasthan and Telangana will be held on 7 December
2018. Technically, the prevailing positive technical conditions helped the markets witness handsome gains last week. The Stochastic, KST and RSI are all placed above their respective averages on the daily and wee kly charts. Further, the MACD is placed above its average on the daily chart. Moreover, the Nifty is placed above its 50-day SMA and 200-day SMA. These positive technical conditions could lead to regular buying support.
The prevailing negative technical conditions, however, still hold good. The MACD is placed below its average on the weekly chart. Further, the Stochastic is placed in the overbought territory on the daily and weekly charts. The Nifty is still placed below its 100-day SMA.
The Nifty’s 50-day SMA is also placed below its 100day SMA and 200-day SMA, signaling a ‘Death Cross’ breakdown. All these negative technical conditions
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could lead to profit-booking and selling pressure, especially at the higher levels.
The +DI line has moved above the -DI line and is placed above 29, which indicates that the buyers are gaining strength. The ADX line is still placed around 15, which indicates lack of strength in trend. The Nifty has closed above 10843, which augurs well for the markets. The Nifty needs to sustain above this level in order to test the 11000 level. 10589 remains a crucial support level. The market sentiment has turned positive but the rally is not broad-based. Index heavyweights have contributed more than the mid-caps and small-caps. Regular follow-up buying support is needed to help the Nifty test the 11000 level. Nevertheless, the markets will turn volatile ahead of the RBI policy and state election results. Meanwhile, the markets will take cues from the forthcoming
RBI policy, news flow on state elections, Dollar-Rupee exchange rate, global markets and crude oil prices. Technically, the Sensex faces resistance at the 36350, 36602, 37165, 37490 and 38125 levels and seeks support at the 35606, 35400, 35187, 34748, 34344, 33723 and 33349 levels.
The resistance levels for the Nifty are placed at 11008, 11081, 11146 and 11515 while its support levels are placed at 10843, 10756, 10710, 10625 and 10589.