Comment

The last week witnessed a bullish undertone as the players bid farewell to the July derivatives series. The rally was led by the technology and the mid-cap stocks, which witnessed a short squeeze with the banking sector bringing up the rear.

The traded volumes rose marginally on a week-on-week basis as trader participation perked up due to the bullishness and the expiry process. The market breadth was positive as the weekly combined exchange advance-decline ratio was 10,837:8,705. The capitalisation of the breadth was also positive as the commensurate figures were Rs 88,891 crore: Rs 57,840 crore.

The FII investments in the markets were positive by Rs 2,507 crore between Monday and Thursday and that saw the rupee end at the 47.82 levels. The US indices gained approximately 1% with the UK headline index trailing marginally. The indices are on an upward trajectory as the higher bottoms and tops formation is intact.

The Dow Jones has indicated an inverse head and shoulder pattern and that is a bullish indicator. The benchmarks are trading at six-month highs and should provide optimistic cues to the domestic markets.

Technically, the Nifty is poised precariously near its congestion level of 4693 which was the inflection point of the June 12, 2009 highs. This hurdle is likely to provide short term resistance as the traders will await a breakout past this hurdle before enhancing fresh long positions. The weekly range advocated for the Nifty between the 4725 and 4250 levels has held as the index kept within this range.

This week is likely to witness a range of 4825 on advances and 4265 on declines. The bullish pivot will be at the 4575 above which the bulls will dominate the markets and 4510 below which the bears may gain strength. With the new derivatives series commencing, the long positions need watching. Fresh additions on the long side may push values higher this week.