Markets in strong uptrend, to see 5850-6275 range

The week belonged to the bulls as the headline indices rallied further, thereby extending the gains of the last 3 weeks, after a technical breakout was witnessed.

The rally was powered by the banking, technology and mid-cap stocks in that order of gains over the previous week. The weekly combined exchange market breadth was marginally negative as the figures were 10,486:11,242. The capitalisation of the same was positive on a commensurate basis as the figures were RS57,850 crore: Rs51,027 crore. The NSE gained Rs1,53,918 crore in market capitalisation over the previous week.

Overseas investors were net buyers to the extent of Rs6,957.8 crore (figures for Sept 29 are not available) in the previous week and that saw the rupee close at the 44.47 levels vis-a-vis the dollar (against the previous week’s levels 45.25 levels). The US markets witnessed a mild decline over the previous week and so did the UK FTSE 100. The change, however, was insignificant in absolute terms. The Asian region saw the Shanghai Composite outperform the Hong Kong and Singapore benchmarks which rallied relatively mildly. The Nikkei 225 ended the week in the red. Overseas cues are flat and the domestic markets are likely to be influenced by local factors and overseas fund flows more than externals inputs until overseas indices make a decisive move in either direction.

Technically, the domestic markets are in a strong uptrend and the weekly range advocated last week between 6125 and 5800 has held as the Nifty topped 6153 without testing the lower threshold.

This week is likely to witness a range of 6275 on advances and 5850 on declines. The bullish pivot will be at the 6075 levels and the bearish pivot at the 6025 levels. Traders may hold existing longs and desist from initiating fresh longs, especially in the leveraged segment. Volatility is likely to  rise from here onwards, thereby causing more frequent whipsaws.