Markets favourably poised for another upmove

The previous week witnessed a tumultuous trading pattern as the headline indices saw see-saw action towards the fag end of the week. The combined exchange weekly advance-decline ratio was positive as the figures stood at 11631:9837.

The capitalisation of the same on a commensurate basis was also positive as the figures stood at Rs36217 crore: Rs33775 crore.

The NSE gained Rs35,364 crore in market capitalisation on a week on week basis. In terms of sectoral performance, the rally was powered by the mid-caps, followed by the technology and banking indices in that order of performance. Of the entire turnover executed during the week, 78% was initiated on upthrust sessions.

The overseas investors were net buyers to the extent of Rs3076.6 crore and that saw the rupee close at the 44.29 levels vis-a-vis the US dollar (previous week 44.57 levels). The US headline indices saw the new economy Nasdaq Composite outperform the old economy DJIA.

The UK FTSE 100 witnessed a tepid close as there was no change on a week on week basis. In the Asian region, the rally was led by Japan, followed by Hong Kong and China with Singapore bringing up the rear.

The overseas cues are positive and the domestic markets are favourably poised (barring any internal negative news flow) to attempt another upmove in the coming week provided the bulls can keep the Nifty spot above the psychological threshold of 5700 levels.

Technically, the domestic markets are interestingly poised at the threshold of a bearish trendline resistance which connects the tops since November 2010. That the Nifty has exhibited a bar reversal (closing lower than the opening) on the weekly chart near the bearish trendline, is a sign of caution.

On the weekly Japanese candle charts, the trading pattern indicates a “spinning top” which indicates some indecision in the bull camp.

The weekly range advocated for the Nifty between the 5875 and 5275 levels have held as the benchmark trended within these levels. This week is likely to see a range of 5825 on the upside as long as the Nifty stays above the bullish pivot at the 5700 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 5650 levels.