Markets seen starting week on a choppy note

The week witnessed a rebound as bulls returned to the ring. The rally was led by the banking sector as bear covering-
cum-fresh buying boosted values.

Mid-cap stocks brought up the rear even as the technology sector was an underperformer in the markets. The BSE and NSE combined weekly market breadth was mildly positive as the figure were 10922:10358. The capitalisation of the breadth was also positive as the commensurate figures were Rs 48,049 crore: Rs 41,345 crore. The NSE gained Rs 40817 crore in market capitalisation.

Overseas investors were net buyers to the extent of
Rs 3,127.60 crore and that saw the rupee close at the 46.77 levels vis-a-vis the dollar (against the previous week’s 46.77 levels). The US markets witnessed a negative closing on a week-on-week basis and the Dow Jones and Nasdaq Composite indices fell almost in lock step. However, what is noteworthy is the lower tops and bottoms formation and the bar reversals as the bulls failed to hold their own against the bears.

The UK FTSE closed with mild gains for the week, thereby outperforming the US markets. The Asian region saw a mixed bag as the Nikkei 225, Shanghai Index and Hang Seng fell, whereas the Singapore STI logged gains. The overseas cues are indicating declines, the extent of which will be known in the coming sessions.

Technically, the domestic markets have seen an attempted breakout as the Nifty scaled a 29-month high and closed at it's highest after the week ended January 25, 2010. That by itself is a bullish indication, but the overseas cues may cause some short-term turbulence.

The weekly range advocated for the Nifty between the 5450/ 5150 last week has held as the Nifty retraced from the 5453 levels, thereby validating the metrics employed.

This week is likely to witness a range of 5525 on advances and 5275 on declines. The bullish pivot will be at the 5425 levels and the bearish pivot at the 5380 levels. The initial part of the week will see choppiness as the overseas turbulence gets factored in.
The latter part of the week will witness actual trend determination. Traders need to proceed with caution this week.