Stiff 5550 hurdle stands in way of next bull move

The week saw a nervous undertone coincide with the August F&O expiry, primarily on weak overseas cues.

The headline indices saw the latter half of the week losing ground on the back of bull unloading. In terms of sectoral movements, the banking sector saw profit sales in excess of the broader markets, followed by the technology and mid-cap sectors.

The weekly combined exchange advance decline ratio stood at 8440:13225. The capitalisation of the same on a commensurate bases was Rs42,190 crore: Rs56,268 crore.

The NSE saw a loss of Rs1,32,321 crore in market capitalisation over the previous week.

Overseas investors were net buyers to the extent of Rs769.50 crore (data for August 23 not included), which saw the rupee closing at 46.89 levels against the dollar (versus the previous week’s 46.67 levels). The US markets ended in the red for the week, but the last session saved bulls the big blushes.

The UK market relatively outperformed the US markets as the FTSE 100 closed with mild gains on a week-on-week basis. The Asian region saw the Japanese and Hong Kong indices lose ground even as the Singaporean markets held up. The Chinese markets lost moderate ground, leaving domestic markets with un-exciting overseas cues for this week.

Technically, the markets are witnessing choppiness as the Nifty attempts to pierce the 5550-5600 skylight, which is acting as a stiff resistance. Unless the bulls manage to overcome the 5550 level forcefully on a sustained closing basis, the next phase of the upthrust may be elusive in the near term.

The weekly range suggested for the Nifty between 5650 and 5300 has held. This week is likely to witness a range of 5650 on the upsides and the 5275 on declines. The bullish pivot for the week will be at the 5500 level and the bearish pivot at the 5450 level. Traders are advised to proceed with caution on long positions as some consolidation/ correction may follow.