Bearish trendline may exert pressure on the Nifty

Last week witnessed a bullish outlook as the bulls clearly prevailed over the bears and the declines witnessed ample support on every significant dip.

The expiry of the March derivatives cycle added to the optimism as the year end saw customary buying support from institutions.
The combined exchange weekly advance decline ratio was positive as the figures stood at 12247:9459. The capitalisation of the same on a commensurate basis stood at Rs39,992 crore: Rs45,343 crore. The NSE gained Rs210,255 crore in market capitalisation on a week-on-week basis. In terms of sectoral performance, the bullish charge was led by the mid-cap sector, followed by the technology and banking sectors.

Overseas investors were net buyers to the extent of Rs3,025.6 crore (data available till March 30 only) and that saw the rupee close at the 44.59 levels vis-a-vis the US dollar (previous week 44.66 levels). The US headline indices saw the Dow Jones Industrial Average (DJIA) test a new 2011 high before settling with 1.28 % gains, the new economy Nasdaq composite ended the week way below the calendar highs but gained more in relative comparison to the DJIA. The UK FTSE 100 witnessed a higher gain compared to the US benchmarks but was below the 2011 highs. In the Asian region, the rally was powered by the Hong Kong and Japanese markets, with the Singapore exchange bringing up the rear. The overseas cues remain largely optimistic and should provide tail winds to the domestic sentiments.

Technically, the domestic markets are nearing a bearish (falling) trendline on the weekly charts which is likely to exert some pressure on the Nifty in the absolute near term. The weekly range advocated for the Nifty between the levels 5850 / 5250 have held as the benchmark trended within these levels. This week is likely to witness a range of 6025 on the upside as long as the Nifty stays above the bullish pivot at the 5775 mark.

In case of declines, the Nifty is likely to test a level of 5500 as long as the bears keep the Nifty below the 5725 levels. Maintain an optimistic view, but watch out for bouts of profit sales at higher levels.

lachman.ramchand@gmail.com