Domestic markets poised to cross Jan 2008 peaks

The markets witnessed a buoyant week as the bulls prevailed over the bears and the benchmark indices closed at new highs (though absolute intra-day life highs were elusive).

The traded volumes were expectedly lower as the festive season curtailed trader participation. The BSE and NSE combined market breadth was positive as the advance decline ratio was 13116:8508.

The market breadth on a commensurate basis was Rs70,741 crore: Rs32,598 crore. The NSE gained Rs5,05,513 crore in market capitalisation on a week-on-week basis. In terms of
sectoral performance, banking midcaps and technology stocks rallied.

The overseas investors were net buyers to the extent of Rs7,743.4 crore during the week till Wednesday (figures include IPO allotments) and that saw the rupee close at the 44.21 levels vis-a-vis the US dollar (previous week 44.42 levels).

The US markets closed at a new calendar year high as the Dow Jones Industrial Average gained 3% on a a week-on-week basis and the Nasdaq gained almost a similar amount. The UK FTSE 100 outperformed the US markets.

The Asian markets saw the regional markets outperform their western counterparts by a wide margin as Hong Kong (6%), China (5%) Japan (4%) and Singapore (3%) rallied higher. The overseas cues remain positive and the coming week will probably see bullish cues.

Technically, the domestic markets have attempted to breakout above the January 2008 absolute peaks and are poised to crossover those hurdles in the near future. The weekly range advocated last week between 6275/5800 levels was overcome on the upside as the Nifty scaled the 6338 level. This week is likely to witness a range of 6500 on advances and 5925 on declines; the wide range being a result of the large base effect of the weekly range.

The bullish pivot will be at the 6250 level and the bearish pivot at the 6175 levels. Traders may nurse their existing longs with a stop loss at the 6175 levels.