Initiate fresh trades on thin exposure only

Last week witnessed a negative undertone in the markets as the bulls hesitated to provided follow-up buying support after the derivatives expiry.

The combined exchange weekly advance-decline ratio was negative at 7,400 : 8,419.

Its capitalisation on a commensurate basis was also negative at Rs23,572 crore : Rs25,449 crore. The National Stock Exchange lost Rs76,693 crore in market capitalisation on a week-on-week basis.

Among sectors, the decline was led by midcap, technology and banking. Of the entire turnover initiated during the week, most was on downtick days.

Overseas investors were net buyers of about Rs759.2 crore, which saw the rupee close at 53.56 vis-a-vis the US dollar (previous week 53.84).
Among the US headline indices, the old economy Dow Jones Industrial Average fell harder than the new economy Nasdaq Composite as bulls booked profits. The UK FTSE100 witnessed a decline in line with its US counterparts.

In Asia, the Singapore market was the regional outperformer, with the Chinese, Japanese and Hong Kong markets declining on a week-on-week basis.

The overseas cues have been weak and the domestic markets will need ample internal bullish triggers to rally this week.

Technically, the domestic markets are in a corrective phase and the Nifty spot is precariously close to the 5625 swing pivot, which will be a support to watch out for positional traders.

The weekly range advocated for the Nifty between 5775  and 5500 has held as the benchmark trended within these levels.

This week is likely to see 5775 on the upside as long as the Nifty stays above the bullish pivot at the 5700 mark.

In case of declines, the Nifty is likely to test 5500 as long as the bears keep the index below 5675.

With the weekly range having contracted for two weeks in a row, the probability of a range expansion in either direction is fairly good.

Traders should initiate fresh trades on thin exposure only.

lachman.ramchand@gmail.com