Weekly market view

The week witnessed a bullish undertone as the headline indices notched up fresh gains to test 30 month highs. The weekly closing on the Nifty has been the highest after the week ended Jan 18, 2008. The market internals point towards caution as the weekly BSE & NSE combined advance decline ratio stood at 10182 : 11154. The retail segment has been unwinding at higher levels. The capitalisation of market breadth on a commensurate basis was Rs 41742 Crs : Rs 41705 Crs. Sectorally, the rally was almost at par in the midcap, banking and technology segments. The Nifty gained Rs 64224 Crs in market capitalisation.

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The FII's were net buyers to the extent of Rs 1083.30 Crs during the week and that saw the INR close at the 46.94 levels vis-a-vis the USD (previous week 46.77 levels). The US markets witnessed buoyancy for the second week in a row as the DJIA rallied almost 3 % and the Nasdaq Composite rallied lower. The UK FTSE 100 rallied as much as the DJIA. The Asian region saw the Shanghai Composite Index lead the bull brigade, followed by the Hang Seng Index. The other Asian indices were more or less flat as the bulls and bears were evenly matched. The overseas cues are neutral-to-positive and should have a positive rub off on the domestic markets.

Technically, the domestic markets are still at the threshold of a breakout into bull territory which will be confirmed as and when the Nifty trades above the 5550 levels on a consistent closing basis. The weekly range advocated for the Nifty between the 5525 / 5275 has held as the index gyrated within these parameters. The coming week is likely to witness a range of 5550 on advances and 5225 on declines. The bullish pivot will be at the 5425 levels and the bearish pivot at the 5400 levels. The coming week should see the markets being dominated by the bulls (barring unforeseen circumstances). The bias should be towards buys, though exposure levels on fresh trades should be curtailed till a breakout past the 5550 levels is confirmed.

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The author is a Mumbai based investment consultant and invites feedback at Vijay@BSPLindia.com and ( 022 ) 23438482.

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