Weekly market view

Hold longs with stop at 5200 - 5250 for now

The week witnessed a bullish undertone as the rally extended for the fifth week in a row. The combined exchange weekly advance decline ratio was positive as the figures stood at 12206 : 9768. The capitalisation of the same on a commensurate basis was also positive as the figures stood at Rs 53136 Crs : Rs 38043 Crs. The NSE gained Rs 140292 Crs in market capitalisation on a w-o-w basis. In terms of sectoral performance, the rally was led by the CNX IT, followed closely by the midcap and banking sectors. Of the entire turnover initiated during the week, 85 % was transacted on upthrust sessions, underscoring the optimism in the sentiments.

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The overseas investors were net buyers to the extent of Rs 4793 Crs and that saw the INR close at the 48.68 levels vis-a-vis the USD (previous week 49.30 levels). The US headline indices saw new economy Nasdaq outperform the old economy DJIA by a wide margin. The UK FTSE 100 witnessed a convincing rally too. In the Asian region, the rally was led by the Hong Kong, Shanghai, Singapore markets, whereas the Japanese markets lost mildly. The overseas cues are largely optimistic and the domestic markets will need an absence of negative news triggers to sustain the upthrust.

Technically, the domestic markets have broken out of the bearish channel and closed above the upper resistance line. The weekly range advocated for the Nifty between the 5350 / 4900 levels have held as the benchmark trended within these levels. The coming week is likely to witness a range of 5500 on the upside as long as the Nifty stays above the bullish pivot at the 5250 mark. In case of declines, the Nifty is likely to test a level of 4925 as long as the bears keep the Nifty below the 5175 levels. Maintain a long bias as long as the Nifty spot stays above the 5250 level.

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The author is a Mumbai based investment consultant and invites feedback at Vijay@BSPLindia.com and 9323720291.

Fair disclosure - The analyst has no positions in any stocks mentioned above.