Nifty move above last two weeks' high (11181) and extend the upmove towards 11300 levels in the coming weeks
As the volatility has started showing signs of reversal on the back of reduced selling by foreign portfolio investors (FPIs), Nifty may see consolidation around 11000 this week, according to market experts.
Dharmesh Shah, head – technical, ICICI Direct said, "In the coming week, we expect the index to maintain a positive bias and move above last two weeks' high (11181) and extend the upmove towards 11300 levels in the coming weeks."
According to him, since 2009, structurally, the index has not corrected for more than nine to 11 weeks in a row.
"In the current context, the index after the recent correction formed a higher trough on the eleventh week. So we expect the index to maintain the same rhythm and start forming higher high-low on the weekly chart in the coming weeks," he said, adding that Nifty has found support near 10900 during the last week on the back of reduced selling by FPIs. However, FPI short positions in F&O space are still intact, which can lead to a range-bound market in the coming days.
"The volatility has started reverting from the intermediate resistance of 18% and hence option writing positions seem to be more conducive for the coming weeks," Shah said.
In the absence of domestic triggers, the domestic equity markets would focus on global cues such as US-China trade talks, FPI selling and investment trends, movement of crude oil and rupee among other factors.
During the past week, BSE Sensex lost 231.58 points, or 0.6%.
Sanjeev Zarbade, VP PCG Research, Kotak Securities, said the global markets ended in the red last week on lingering concerns of a trade war. This is taking a toll on global investor confidence. Easing of bond yields is pointing towards a slowdown in the global economy.
"Indian markets also ended lower last week on disappointing earnings and selling by FIIs. Devaluation of the Chinese yuan is also making currencies of emerging markets nervous, which is also driving FPIs to sell emerging market equities in favour of safe assets like gold and the US dollar," Zarbade said.
According to him, the macro-economic fundamentals of the economy are good, but consumer demand has continued to weaken in recent months.
"The just-concluded earnings season was not encouraging either and brokerage houses will soon scale down their full-year Nifty/Sensex earnings. This will restrict upside for the Nifty/Sensex in the near term. Trade disputes, global bond yields and currency will be the main monitorables for the market in the coming weeks," he said.
POSITIVE BIAS
- Nifty move above last two weeks' high (11181) and extend the upmove towards 11300 levels in the coming weeks
- Since 2009, structurally, the index has not corrected for more than nine to 11 weeks in a row
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"In the current context, the index after the recent correction formed a higher trough on the eleventh week. So we expect the index to maintain the same rhythm and start forming higher high-low on the weekly chart in the coming weeks," he said, adding that Nifty has found support near 10900 during the last week on the back of reduced selling by FPIs. However, FPI short positions in F&O space are still intact, which can lead to a range-bound market in the coming days.
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