Comment

The markets witnessed a bullish week as the bulls emerged to offer support at lower levels. The rally was led by technology, banking and mid-cap stocks. The combined exchange market breadth was positive as the figures were 11184:8883.

The capitalisation of the breadth on a commensurate basis was also positive as the figures were Rs 70,609 crore:Rs43,478 crore. The Nifty gained Rs 23,2006 crore in market capitalisation over the previous week.

Investments by foreign institutional investors (FIIs) were positive by Rs 2,201.80 crore during the week, and that had a positive impact on the rupee, which firmed up to the 46.34 level vis-a-vis the dollar, from the previous week’s 46.81 levels.

The UK markets outperformed the US markets on a relative basis, as the UK FTSE 100 gained almost 3% and the Dow Jones Industrial Average

(DJIA) closed at the highest point of the year 2009. My projection of the DJIA at 10500+ levels remains intact and that is likely to have a positive rub off on domestic sentiments.

In the Asian markets pack, the Nikkei 225 index was the drag on the markets by ending in the red. The Hang Seng index was the strong performer and is likely to remain so in this week as it attempts to scale new 2009 highs.

Technically, the domestic markets are still below their recent October highs and a breakout above these peaks will be needed to rope in broader-based participation.
The said breakout must be on higher volumes and open interest expansion if the upthrust is to sustain. The weekly Nifty range advocated last week — between the 5020 and 4600 levels — has held as the benchmark retraced from the 5018 levels, thereby validating the wave count employed.

This week is likely to witness a range of 5150 on advances and 4640 on declines. The weekly bullish pivot will be at the 4940 levels and the bearish pivot will be at the 4870 levels. Long positions may be maintained with a stop loss at the 4870 levels, a close below this threshold may see short-term weakness.