Bulls need local cues to keep tempo up

The last week witnessed a bullish sentiment in the markets as the rally extended into the third week. The combined exchange weekly advance-decline ratio was positive as the figures stood at 11,389 : 10,114. 

The capitalisation of the same on a commensurate basis was also positive as the figures stood at Rs41,248 crore : Rs30,622 crore. The NSE gained Rs154,106 crore in market capitalisation on a week-on-week basis. 

In terms of sectoral performance, the banking sector was the market outperformer, followed by the midcap and technology space. Of the entire turnover initiated during the week, 57% was initiated on upthrust sessions, indicating a sentiment controlled by the bulls. 

The overseas investors were net buyers to the extent of Rs3,171 crore and that saw the rupee close at the 50.31 levels vis-a-vis the US dollar (previous week 51.54 levels). 

The US headline indices saw new economy Nasdaq Composite outperforming the old economy Dow Jones Industrial Average by a wide margin. The UK FTSE100 witnessed a rally to close at its highest in six months. In the Asian region, the surge was led by the Hong Kong, Chinese, Japan and Singapore markets in that order. 

The overseas cues are positive and the domestic markets will need positive internal triggers to build on the previous week’s rally.

Technically, the domestic markets remain within the bearish channel and have crossed the halfway mark towards the upper boundary. 

The weekly range advocated for the Nifty between the 4550/ 5025 levels have held as the benchmark trended more or less within these levels. 

This week is likely to witness a range of 5250 on the upside as long as the Nifty stays above the bullish pivot at the 4975 mark. In case of declines, the Nifty is likely to test a level of 4650 as long as the bears keep the Nifty below the 4900 levels. The bias is towards the upside for now. Hold longs with a stop loss at the 4975 levels.