Comment

The markets witnessed a mild upthrust last week as the bulls found the 5300 resistance too stiff to overcome. The market breadth was positive as the combined advance decline ratio on the Bombay Stock Exchange and the National Stock Exchange (NSE) was 11901:9347 and the capitalisation of the same on a commensurate basis was Rs 48,634 crore:Rs 71,075 crore as the selling pressure at higher levels was evident.

The NSE gained Rs 1,14,341 crore in market capitalisation.
The technology segment outperformed the markets and the banking sector dragged the markets as unwinding was seen on banks.

Overseas investors were net buyers to the extent of Rs 4,302.20 crore, including IPOs and block deals. That had a stabilising effect on the rupee, which ended at 45.78 level as against 45.76 the previous week.

The Dow Jones Industrial Average indicated a bar reversal on the weekly charts and so did the Nasdaq Composite, which fell harder than the DJIA. The UK FTSE 100, too, fell as higher levels found no takers.

That is likely to have a sobering impact on domestic sentiments in the coming week as well. In Southeast Asia, the Hang Seng Index and the Straits Times Index fell to log bar reversals, whereas the Nikkei made a new calendar high. This diversion should be viewed as a sign of caution and the nervousness can spread if the bulls unwind even marginally.

Technically, the domestic markets are witnessing chinks in the bulls’ armour as the sectoral indices are witnessing negative divergences. The banking and financial sector is witnessing attrition whereas the technology sector is discounting the immediate news trigger of positive earnings. Should the chasm between technology and the financials deepen, the bears are likely to grab the initiative in the near term.

The weekly range advocated for the Nifty last week between 5400 and 5080 has held as the index traded within these parameters.
This week is likely to witness a range of 5325 on advances, which if surpassed, could test the 5375 levels. On declines, the 5075 will be the meaningful support to watch out for. Bulls are advised to tread with caution and treat capital preservation as their primary objective.