More upsides likely before profit-taking sets in

Last week witnessed a bullish undertone as the previous weeks buying momentum extended. The combined exchange weekly advance decline ratio was positive as the figures stood at 12392 : 9003. The capitalisation of the same, on a commensurate basis, was also positive as the figures stood at Rs39,371 crore: Rs34,758 crore.

The NSE gained Rs17,2853 crore in market capitalisation on a week-on-week basis. In terms of sectoral performance, the upthrust was led by the banking index, followed by the technology and mid-cap indices.

The overseas investors were net buyers to the extent of Rs3,578.8 crore (Monday-Wednesday) and that saw the rupee close at the 44.57 levels vis-a-vis the dollar (previous week 44.99 levels).

The US headline indices saw the DJIA and Nasdaq logging the strongest weekly gains for the calendar year and squeezing the bears. The UK FTSE 100 witnessed a relatively stronger performance as the benchmark gained more than it’s US counterparts. In the Asian region, the rally was led by Singapore and Japan, followed by Hong Kong and China. The overseas cues have been positive and the domestic markets enjoy the tailwinds of an enthusiastic environment.

Technically, the domestic markets have bounced from the threshold of a channel bottom after a brief violation of the same in the prior week. That raises the possibility of the throw under being followed by a throw over (testing the channel top). The weekly range advocated for the Nifty between the 5650/5050 levels have been overcome as the benchmark overcame the upper levels. This week is likely to witness a range of 5875 on the upside as long as the Nifty stays above the bullish pivot at the 5600 mark. In case of declines, the Nifty is likely to test a level of 5275 as long as the bears keep the Nifty below the 5525 levels. The probability, of further upsides before profit taking sets in, is fair.

lachman.ramchand@gmail.com